Bangalore District Court
M/S Mamta Metal Corporation vs M/S Hoysala Technologies India Pvt Ltd on 27 February, 2025
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CC No. 19546 / 2019
KABC030616582019
Presented on : 26-08-2019
Registered on : 26-08-2019
Decided on : 27-02-2025
Duration : 5 years, 6 months, 1 days
IN THE COURT OF XX ADDL.CHIEF JUDICIAL MAGISTRATE
AT BENGALURU CITY
PRESENT: SRI. SHRISHAIL BHIMASHEN BAGADI,
B.Com.,L.L.B.,
XX ADDL. C.J.M., Bengaluru.
Dated this the 27th day of February 2025
C.C.No. 19546/ 2019
M/s. Mamta Metal Corporation,
Complainant : Shop No.2, CA Area,
Main Pump House,
Opp to Fouress Engg.
Peenya 2nd Phase,
Bengaluru - 560 058
Represented by its Proprietor
Sri. Arjuna Ram Devasi
Aged 40 years,
S/o. Sri. Madhaji,
Occupation Trade Business
(By Sri. L.Lankesh -Advocate)
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CC No. 19546 / 2019
Accused : M/s. Hoysala Technologies India Pvt.
Sy.No.126/1, Site No.3 & 4
Near BMTC Bus Depot,
Kempaiah Garden
Peenya 4th Phase,
Bengaluru - 560 058,
Represented by its
Managing Director
And Authorized Signatories
1. Sri. Nandeesh,
Aged about 32 years,
2.Sri.Ragegowda,
Aged about 35 years,
3. Sri. Prabhakar
Aged about 38 years,
(By Sri. J T Gireesha- Advocate)
Offence complained : U/S. 138 of N.I. Act.,
Plea of accused : Pleaded not guilty
Final Order : Accused is convicted.
Date of Judgment : 27.02.2025
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JUDGMENT
The complainant has filed this complaint against the
accused under section 200 of the Cr.P.C, alleging that, the
accused has committed an offense punishable under section
138 of the Negotiable Instruments Act.
2. The brief facts of the complainant’s case are as
follows:
The complainant is a proprietorship concern represented
by its sole proprietor. The accused is a private limited
company; the accused no. 1 to 3 are the directors of the
company. The accused no. 2 died during the pendency of
this case; hence, the case against the accused no. 2 stands
abated. The complainant firm had supplied C.R.S.S. sheets
and coils to the accused persons from 04.01.2019 to
27.03.2019 for Rs.12,18,582/-, through invoice no.1018
dated 04.01.2019 for Rs.2,46,874/-, invoice no.1023 dated
05.01.2019 for Rs.3,76,665/-, invoice no.1067 dated
25.01.2019 for Rs.3,45,783/-, and invoice no.1188 dated
27.03.2019 for Rs.2,49,260/-, all the materials were
4CC No. 19546 / 2019
supplied on a credit basis. To pay the bill amount, the
accused persons have issued four cheques bearing no.
000590 dated 08.04.2019 for Rs. 3,23,107/-, cheque no.
000591 dated 11.04.2019 for Rs. 3,23,107, cheque no.
000592 dated 15.04.2019 for Rs. 3,23,108/-, and cheque
no. 000593 dated 13.05.2019 for Rs. 2,49,260/-, all the
cheques drawn on ICICI Bank, Peenya Industrial Area
Branch, Bengaluru. At the time of issuance of the cheques,
the accused persons assured the complainant that all the
cheques would be honored on their presentation. Reposing
confidence in the accused persons, the complainant
presented the said cheques for collection through his
banker, Kotak Mahindra Bank Ltd., Peenya Branch,
Bengaluru, but all the cheques were dishonored with an
endorsement ‘funds insufficient’ as per the bank
endorsement dated 03.07.2019. The factum of dishonor of
the cheques was duly communicated to the accused by
issuing a legal notice dated 15.07.2019 through RPAD; the
said notice was duly served to the accused on 17.07.2019.
Even after the receipt of the legal notice, the accused
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CC No. 19546 / 2019
persons failed to pay the cheque amount or issue a reply
notice; hence, the complainant has filed this complaint
against the accused persons.
3. On receipt of the complaint, the court verified its
contents, recorded the sworn statement of the complainant
through an evidence affidavit, and got marked documents at
Ex.P.1 to P.19. Based on averments of the complaint, sworn
statement, and documents, the court took cognizance of the
offence punishable under section 138 of the Negotiable
Instruments Act, registered the case, and issued summons
to the accused. On receipt of the summons, the accused
appeared before the court through his counsel and was
enlarged on bail. In compliance with section 207 of the
Cr.P.C., a copy of the complaint and other relevant
documents was supplied to the accused persons, the
substance of the accusation was read over and explained to
them, and they did not plead guilty and claimed to be tried.
As per section 145(1) of the Negotiable Instruments Act, the
sworn statement affidavit of the complainant was treated as
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CC No. 19546 / 2019
his chief examination, and the documents produced at the
time of recording his sworn statement were adopted as
documentary evidence. The learned counsel for accused no.
1 and 3 fully cross-examined PW.1, and after the completion
of the complainant side evidence, the incriminating
circumstances that appeared in the complainant evidence
were read over to them. The accused persons denied the
entire evidence of the complainant, and to prove their
defence, accused no. 3 adduced his evidence on his behalf
but not on behalf of accused no. 1 and got marked
documents at Ex. D.1 to D.4. Both PW.1 and DW.1 were
subjected to cross-examination by their respective counsels.
4. On perusal of the complaint averments and
documents furnished by both parties, the following points
that arise for my consideration.
POINTS FOR CONSIDERATION
1. Whether the accused no. 1 and 3 have
successfully rebutted the presumption
available under section 139 of the Negotiable
Instruments Act that they were not issued
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CC No. 19546 / 2019
the cheques to the complainant to discharge
the legally enforceable debt ?
2. Whether the accused no. 3 is held
guilty of the offence under section 138 of the
NI Act, without there being his active
involvement in the day-to-day activities of
the company ?
3. Whether the complainant has complied
with the mandatory requirements of section
138 of the Negotiable Instruments Act?
4. What order or sentence?
5. The learned counsel for the complainant and
learned counsel for the accused no.3 have canvassed their
oral arguments and learned counsel for the accused no.1
has submitted his written arguments.
6. Upon hearing arguments and on perusal of the oral
and documentary evidence made available by the
complainant and the accused no.3, my answers to the above
said points are as under;
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CC No. 19546 / 2019
Point No.1 In the partly affirmative
Point No.2 In the negative
Point No.3 In the affirmative
Point No.4 As per the final order
for the following
REASONS
Point No.1 to 3 :
7. These points are interconnected with each other,
hence to avoid repetition of facts and appreciation of
evidence, all the points are taken together for common
discussion.
8. The complainant and accused persons have been
transacting business since 04.01.2019; the complainant
had supplied the materials to the accused from 04.01.2019
to 27.03.2019; the materials were supplied through
invoices; the accused persons, by acknowledging the
payment, had issued four cheques for Rs. 12,18,582/-; and
the amount due from the accused persons was
Rs.12,18,582/-, all the accused persons signed the cheques
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CC No. 19546 / 2019
on behalf of the private limited company. The cheques
issued by the accused persons were dishonored due to
insufficient funds; the demand notice issued by the
complainant was duly served to the accused persons;
despite that, they did not pay the cheque amount nor issue
a reply notice by denying the transaction with the
complainant.
9. The accused no. 1 and 3 have taken separate
defences; the accused no. 3 has not denied the transaction
with the complainant, but his defence is that at the time of
the transaction with the complainant, he was not
discharging his duty as a director of the company, and he
was not involved in the day-to-day business activities of the
company, and he tendered his resignation to the accused
company and also the department of companies, though his
signature appeared on the cheque, but he was not the
authorized signatory of the company, and he did not involve
himself in the business activities of the company. Accused
No. 1 has taken a specific contention that the materials
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CC No. 19546 / 2019
supplied by the complainant were not delivered to him; the
complainant has created the invoice bill, but those invoice
bills do not contain the seal and signature of the accused
company, though the accused No. 1 has set up a defence,
but he did not enter into the witness box to disprove the
case of the complainant.
10. The complainant to prove his case examined
himself as PW.1 and in his examination in chief affidavit, he
has reiterated the averments of the complaint, in addition to
his oral evidence, the complainant has produced the
documents as per Ex.P.1 to P.19, among these documents,
Ex.P. 1 to P.4 are the cheques issued by the accused
persons to pay the legally enforceable debt, the signature of
the accused persons marked as Ex.P.1(a) to P.1(c), 2(a) to
2(c), 3(a) to 3(c) and 4(a) to 4(c), those cheques have been
issued by the accused persons on behalf of ‘Hoysala
Technologies India Private Limited Company’, which
contains the name of the complainant as payee and the
amount payable by the accused persons, Ex.P.5 to P.8 are
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CC No. 19546 / 2019
the cheque return memos, which discloses that, the cheques
issued by the accused persons came to be dishonoured due
to funds insufficient, Ex.P.9 is the legal notice issued by the
complainant to the accused company and its directors who
are arrayed in this case as accused no.1 to 3 calling them to
pay the cheque amount, Ex.P.13 to P.15 are the postal
acknowledgments which bears the seal and signature of the
accused persons, Ex.P.16 to P.19 are the tax invoices which
bears the seal and signature of the accused company, on
the back side of the each invoice bills attached with E-Way
Bills which shows the mode of transport of the materials to
the accused persons.
11. The learned counsel for the accused no. 1 has
cross-examined PW.1 and put a question that the materials
sent through invoice bills were not delivered to the accused
persons, but on perusal of the Ex.P.16 to P.19, it is
disclosed that the accused persons have put the company
seal on the invoice bills, which is sufficient to prove that the
materials sent by the complainant were delivered to the
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CC No. 19546 / 2019
accused persons; and they would not have issued the
cheques to the complainant if the materials had not been
delivered to them; therefore, it is a false defence taken by
the accused no. 1 that he has not received the delivery of
the goods sent by the complainant. Further, the
complainant categorically stated that he had transacted
business with the accused no. 1 and he was an authorized
person of the accused company to manage the affairs, and
he did not know the active involvement of other accused
persons. The learned counsel for accused No. 3 has also
cross-examined PW.1, and he deposed in his cross-
examination that he contacted accused No. 1 to supply the
materials to the accused company, and he transacted
business with accused No. 1, but he did not have any
information about accused No. 3, and he made accused No.
3 an accused due to his signature appearing on the cheque.
Except for these admissions, the learned counsel for
accused no. 1 and 3 have failed to elicit from the mouth of
the complainant that the cheque in question was not issued
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to him by the accused persons to pay the legally enforceable
debt.
12. Accused no. 3, to prove his defence, himself
examined on oath as DW.1, and he deposed that accused
no. 1 had known him for 10 years, and he worked as
director of the accused company from 01.03.2013 to
03.08.2018, and he gave his resignation to the post of
director on 03.08.2018, and on the same day his resignation
was accepted, and he never worked as a director of the
accused company between 04.01.2019 and 27.03.2019, and
he did not know the transaction that was done by the
complainant with the accused company, and his signatures
did not appear on the disputed cheques. The learned
counsel for the complainant has cross-examined Accused
No. 3. and he deposed that he did know on which dates Ex.
D. 2 to 4 (resignation and company status report) he took
the printouts because his company secretary had taken the
printouts of resignation acceptance and company status
reports, and the computer from which the printouts were
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CC No. 19546 / 2019
taken does not belong to him, and before sending his
resignation letter, he sent a FORM NO. DIR-11 to the
registry of the company, and he has to give thirty days prior
notice to the board of directors before tendering his
resignation, but he did not give prior notice to the board of
directors, but he gave notice to accused No. 1/Nandeesh,
further, he admits that the Ex.P.1 to P.4 cheques belong to
the accused company. The accused No. 3 has produced
Ex.D.1, a resignation letter given to the accused No.1, which
discloses that on 03.08.2018 itself the accused No. 3
tendered his resignation. On perusal of Ex.D.2 to 4, it is
disclosed that the names of the accused No. 1 and 2 are
mentioned as the directors of the accused company, and the
resignation tendered by the accused No. 3 was accepted by
the Ministry of Corporate Affairs.
13. The complainant in his cross-examination stated
that he had made a transaction with the accused no. 1 by
the name of Nandeesh, who had given the cheques to the
complainant to pay the legally recoverable debt. The
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complainant in his complaint has not stated specifically that
the accused no. 3 was involved in the alleged transaction
and he was discharging his duty at the time of the
transaction. If accused no. 3 was not involved in the day-to-
day activities of the accused company, then he cannot be
made liable for any consequences under section 138 of the
Negotiable Instruments Act. Merely putting a signature by
the director is not sufficient to hold him guilty unless the
complainant has to establish before the court that the said
director was involved in the day-to-day affairs of the
company, in this regard I have relied upon the judgment of
the Hon’ble Supreme Court of India reported in [2024] 3
S.C.R. 655 Susela Padmavathy Amma v. M/S Bharti Airtel
Limited, in this case the Hon’ble Supreme Court of India
has held that,
A company is in charge of its
everyday affairs. We have discussed
about the position of a director in a
company in order to illustrate the
point that there is no magic as such
in a particular word, be it director,
manager or secretary. It all depends
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upon the respective roles assigned to
the officers in a company. It was held
that merely because a person is a
director of a company, it is not
necessary that he is aware about the
day-to-day functioning of the
company. This Court held that there
is no universal rule that a director of
a company is in charge of its everyday
affairs. It was, therefore, necessary, to
aver as to how the director of the
company was in charge of day-to-day
affairs of the company or responsible
to the affairs of the company. This
Court, however, clarified that the
position of a managing director or a
joint managing director in a company
may be different. This Court further
held that these persons, as the
designation of their office suggests,
are in charge of a company and are
responsible for the conduct of the
business of the company. To escape
liability, they will have to prove that
when the offence was committed, they
had no knowledge of the offence or
that they exercised all due diligence
to prevent the commission of the
offence.
14. In the case of Pooja Ravinder Devidasani vs. State
of Maharashtra and another this Court observed thus:
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Every person connected with the
Company will not fall into the ambit
of the provision. Time and again, it
has been asserted by this Court that
only those persons who were in
charge of and responsible for the
conduct of the business of the
Company at the time of commission
of an offence will be liable for criminal
action. A Director, who was not in
charge of and was not responsible for
the conduct of the business of the
Company at the relevant time, will
not be liable for an offence under
Section 141 of the NI Act.
15. Therefore, keeping in mind the ratio laid down in
the above-mentioned decision, it is clear that accused no. 3
was not involved in the day-to-day business activities of the
accused company, and he tendered his resignation before
purchasing the materials from the complainant, merely
putting his signature on the cheques the accused no.3
cannot be held liable; the complainant has stated that he
transacted business with accused no. 1/Nandeesh, and he
does not know the accused no. 3. Under such
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circumstances, the accused no. 3 is not held liable for the
offence under section 138 of the Negotiable Instruments Act.
16. The accused no. 1 has not proved his defence by
entering the witness box, and he has not denied the
issuance of cheques, and his signature appeared on the
cheques. The legal notice issued to the accused No. 1 was
duly served to him; despite that, he had not paid the cheque
amount nor issued a reply notice. If the accused failed to
rebut the presumption under section 139 of the Negotiable
Instruments Act, then the court has to presume that the
cheque in question was issued by the accused to the
complainant to pay the legally enforceable debt, in this
regard I have relied upon the judgment, reported in decision
Rajesh Jain Vs Ajay Singh, reported in (2023) 10 SCC 148
has held that, the legal burden is the burden of proof which
remains constant throughout a trial. On the other hand, the
evidential burden may shift from one party to another as the
trial progresses, according to the balance of evidence given
at any particular stage. In all trials concerning dishonour of
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cheque, the court are called upon to consider whether the
ingredients of the offence enumerated in section 138 of the
Act have been met and if so, whether the accused was able
to rebut the statutory presumption contemplated by section
139 of the Act, further, it said that section 139 is a reverse
onus clause and requires the accused to prove the non-
existence of the presumed fact, I,e that cheque was not
issued in discharge of a debt/ liability. Further held that,
the NI Act provides for two presumptions, one under section
118 of the Act, which directs that it shall be presumed, until
the contrary is proved, that every negotiable instrument was
made or drawn for consideration. Further, under section
139, which stipulates that unless the contrary is proved, it
shall be presumed that the holder of the cheque received the
cheque for the discharge of, whole or part of any debt or
liability. The ‘presumed fact’ directly relates to one of the
crucial ingredients necessary to sustain a conviction under
section 138 of the NI Act. Further held that, section 139 of
the NI Act, which takes the form of a ‘shall presume’ clause
is illustrative of a presumption of law. It is obligatory for the
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court to raise this presumption has been established. But
this does not preclude the person against whom the
presumption has been established. But this does not
preclude the person against whom the presumption is
drawn from rebutting it and proving the contrary, as is clear
from the use of the phrase ‘ unless the contrary is proved’,
after taking note of Bir Singh Vs Mukesh Kumar (2019)4
SCC 197, wherein it was held that presumption takes effect
even in a situation where the accused contends that ‘ a
blank cheque leaf was voluntarily signed and handed over
by him to the complainant, without admitting the execution
of the entire contents in the cheque, is not sufficient to
trigger the presumption. Further held that, as soon as the
complainant discharges the burden to prove that, the
instrument was issued by the accused for discharge of debt,
the presumptive device under section 139 of the Act, that
helps to shift the burden on the accused of proving that the
cheque was not received by the bank towards the discharge
of any liability. Until this evidential burden is discharged by
the accused, the presumed fact will have to be taken to be
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true, without expecting the complainant to do anything
further. In the case of Basalingappa Vs Mudibasappa (2019)
5 SCC 418 held that, to rebut the presumption and prove to
the contrary, it is open to the accused to raise a probable
defence, wherein the existence of a liability enforceable debt
or liability can be contested. The words ‘ until the contrary
is proved’ occurring in Section 139 do not mean that
accused must necessarily prove the negative that the
instrument is not issued in discharge of any debt/liability,
but the accused has two options. The first option is to prove
that the debt/liability does not exist and conclusively
establish the cheque was not issued in discharge of a debt /
liability. The second option is to prove the non existence of
debt / liability by a preponderance of probabilities by
referring to the circumstances of the case. The nature of
evidence required to shift the evidential burden need not
necessarily be direct I,e oral or documentary evidence or
admissions made by the opposite party ; it may comprise
circumstantial evidence or presumption of law or fact.
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17. Keeping in mind the ratio laid down in the above-
said decisions, accused No. 1 has to rebut the presumption
under section 139 of the Negotiable Instruments Act with
cogent and acceptable evidence. The accused failed to prove
that he had not issued the cheques to pay the legally
enforceable debt and also failed to prove that Ex.P.16 to
19/invoice bills are the created documents. The
complainant has complied with the mandatory
requirements of section 138 of the Negotiable Instruments
Act with cogent evidence, but the accused No. 1 failed to
prove his defence. Accused no. 1 holds the payment of the
outstanding bill amount from 04.01.2019; if he could have
made a timely payment, then the complainant would have
invested the money for the development of his business.
Because of the delay in making payment by the accused,
the complainant has suffered for more than 6 years;
therefore, the accused is liable to pay the additional
compensation amount of Rs. 4,00,000/- along with the
cheque amount. If the court blindly awarded only the
cheque amount as compensation, then it would be a great
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injustice to the complainant; therefore, it is just and proper
to impose an additional compensation amount on the
accused no. 1; otherwise, the purpose of dragging the
matter by the accused no. 1 went without there being valid
compensation.
18. The complainant has not proved that accused no. 3
was involved in the day-to-day business activities of the
accused company, and there is no evidence or pleading that
accused no. 3 was working as managing director of the
company; hence, accused no. 3 is liable to be acquitted.
Therefore, it is a fit case to convict the accused company
and accused no. 1 because he has taken a false defense
that the materials sent by the complainant were not
received by him despite having a seal and signature on the
invoice bills; hence, the accused company and accused no.
1 are liable to pay the entire cheque amount along with an
additional compensation amount to the complainant.,
accordingly I answer point no.1 in the partly affirmative,
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point no.2 in the negative and point no.3 answered in the
affirmative.
Point No.4 :
19. For the above said reasons and discussions, I
proceed to pass the following:
ORDER
Acting under section 255(1) of the
Cr.P.C the accused No.3 by name
Prabhakar is hereby acquitted for the
offense punishable under section 138 of
the Negotiable Instruments Act.
Acting under section 255(2) of the
Cr.P.C the accused company by name
M/s Hoysala Technologies Indid Pvt Ltd
and accused no.1 by name Nandeesh are
hereby convicted for the offense
punishable under section 138 of the
Negotiable Instruments Act.
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The accused company by name M/s
Hoysala Technologies Indid Pvt Ltd and
accused no.1 by name Nandeesh shall
pay a fine of Rs. 16,23,582/- (which
includes cheque amount of
Rs.12,18,582/-, additional compensation
amount of Rs.4,00,000/- and fine
amount of Rs.5,000/- payable to the
government) in default accused No.1
Nandeesh shall undergo simple
imprisonment for Six month for the
offense punishable under Section 138 of
the Negotiable Instrument Act. Even after
undergoing a default sentence, which
shall not absolve the payment of the fine
amount by the accused no. 1.
As per Section 357 of Cr.P.C. out of the
fine amount Rs.16,18,582-(which
includes cheque amount and additional
compensation amount) is to be paid to the
complainant as compensation and the
balance amount is to be remitted to the
state government.
Bail bond and surety bond of the
accused shall stand canceled.
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Further, in exercise of power conferred
under section 424(1)(a) of Cr.P.C the
accused is permitted to pay/deposit the
fine amount of Rs. 16,23,582/- within 30
days from this order and execution of
sentence passed against him in view of
the above permission stands suspended
for a period of 30 days from today.
Supply free copy of the judgment to
the accused.
(Directly typed by me on my laptop, corrected by me and pronounced
the judgment in the open court on this 27th day of February 2025)(SHRISHAIL BHIMASHEN BAGADI)
XX A.C.J.M., Bengaluru.
ANNEXURE
List of witnesses examined on behalf of complainant:
P.W.1 Arjuna Ram Devasi
List of documents produced on behalf of complainant:
Ex.P.1 to P.4 Cheques
Ex.P. 1(a) to 4(a) Signatures of the accused No.1
Ex.P. 1(b) to 4(b) Signatures of the accused No.2
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Ex.P. 1(c) to 4(c) Signatures of the accused No.3
Ex.P. 5 to 8 Bankers Return Memos
Ex.P.9 Copy of the legal notice
Ex.P.10 to 12 Postal Receipts
Ex.P.13 to 15 Postal Acknowledgments
Ex.P.16 to 19 Tax Invoices
List of witnesses examined on behalf of accused:
D.W.1 Prabhakar
List of documents produced on behalf of accused:
Ex.D.1 Resignation letter of accused
Ex.D.2 Online copy of MCA brief
information
Ex.D.3 Online copy regarding viewing
signatory details
Ex.D4 Form No. DIR- 12
Ex.P.D5 65 B Certificate of Indian
Evidence Act
XX A.C.J.M.,
Bengaluru.
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