Bangalore District Court
M/S. Peps Industries Pvt Ltd vs M/S. Priya Distributors on 2 August, 2025
KABC0B0094842023
IN THE COURT OF THE XVII ADDL. JUDGE,
COURT OF SMALL CAUSES &
ADDL. CHIEF METROPOLITAN MAGISTRATE,
MAYO HALL UNIT, BENGALURU (SCCH-21).
PRESENT: Sri. Vijaykumar S. Hiremath,
LL.B
XVII ADDL. JUDGE,
Court of Small Causes & A.C.M.M,
Bengaluru.
Dated: This the 02nd day of August, 2025.
C.C.No.54729/2022
Complainant/s : M/s PEPS INDUSTRIES PVT. LTD.
Head Office at V-1D,
NGEF Industries estate,
Mahadevapura,
Bangalore - 560048.
Represented by Sri.Abhishek .S.
Senior Admin Manager.
(By Smt. Sunitha Srinivas, Adv.,)
V/s.
Accused/s : 1. M/s PRIYA DISTRIBUTORS
Plot No.18, Kalyanpuri Colony,
Opp. Survey of India, Uppai,
Hyderabad - 500039.
2. My. P.V.RAMESH
Proprietor,
M/s Priya Distributors
Plot No.18, Kalyanpuri Colony,
Opp. Survey of India, Uppai,
Hyderabad - 500039.
(By Sri. S. G. Muniswamy, Adv.,)
SCCH-21 2 C.C. No.54729/2022
Date of institution of the : 06-07-2022
Complaint
Nature of the Complaint : U/Sec.138 of N. I. Act
Date of commencement of : 06-07-2022
recording of the evidence
Date on which the Judgment : 02-08-2025
was pronounced
Duration of the Complaint Year/s Month/s Day/s
03 00 26
JUDGMENT
The accused in this case is tried for an offence
punishable under Section 138 of Negotiable Instrument Act
1881, on the complaint of the complainant.
2. The summary of the complainant’s case is
that:
It is the case of the complainant that, it is a Private
Limited company incorporated under the Indian Companies
Act and engaged in the business of manufacturing of Spring
Mattresses and Pillows. The accused No.1 being one of the
Distributors of the Complainant represented by accused No.1
has placed certain orders and purchased the Mattresses,
Pillows and Accessories on Invoice basis. The accused were
due in a sum of Rs.24,05,940/-. Hence, balance
confirmation letter was sent to accused on 28-07-2021. The
accused confirmed that they are due in a sum of
Rs.22,34,197/- as on 30-06-2021. Thereafter towards
discharge their liability the accused no.2 has issued one
SCCH-21 3 C.C. No.54729/2022cheque bearing No.791312 dated 20-04-2022 for a sum of
Rs.24,05,940/- drawn on State Bank of India, Prasanth
Nagar, Uppal, Hyderabad branch, Telangana. As per the
instructions of the accused, the said cheque was presented
to Complainant banker Axis Bank, Kalyan Nagar Branch,
Bangalore. On presentation of said cheque for encashment,
same dishonoured and returned on 26-04-2022 with a
shara stating “Funds Insufficient.” Hence, the
complainant got issued legal notice to the accused on 21-05-
2022 and same returned on 04-06-2022 as “Unclaimed.”
Inspite of issuance of legal notice, the accused has not made
any payment. Hence, constrained by the same, the present
complaint is filed against the accused for the offence
punishable U/Sec.138 of N. I. Act.
3. On filing of the complaint, the cognizance was
taken for an offence punishable under Section 138 of N. I.
Act and sworn statement was recorded. As there was
sufficient ground to proceed further, a criminal case has
been registered against the accused and they were
summoned. The substance of accusation is orally stated to
the accused and their plea was recorded. The accused were
pleaded not guilty and submitted that they have defence to
make.
4. In support of the complainant’s case, the
Complainant filed Sworn statement by way of affidavit
during the pre-summoning stage is considered as evidence
of the complainant company as PW.1 and got marked
documents as per Ex.P.1 to Ex.P.12 and during the course of
SCCH-21 4 C.C. No.54729/2022
cross-examination confronted 03 documents on behalf of
accused which were marked as per Ex.D.1 to Ex.D.3. The
Authorized Signatory of accused got examined as DW.1 and
got marked documents as Ex.D.4 to 9.
5. Heard the arguments and perused the materials
available on record.
6. The points that arise for my consideration are:
1. Whether the Complainant proves
that, accused has committed an
offence punishable under Section 138
of N. I. Act 1881?
2. What order?
7. My answer to the above Points is as follows:
Point No.1: In the Affirmative,
Point No.2: As per final order,
for the following:
REASONS
8. POINT No.1: Section 138 of the Negotiable
Instrument Act has been enacted to lend credibility to the
financial transactions.
9. The main ingredients of the offence U/s 138 of
Negotiable Instrument Act are;
(i) Drawing up of a cheque by the accused
towards payment of an amount of money,
for discharge, in whole or in part, of any
debt or any other liability.
(ii) Return of the cheque by the Bank as
SCCH-21 5 C.C. No.54729/2022
unpaid.
(iii) The drawer of the cheque fails to
make the payment of the said amount
within 15 days of the receipt of notice
under the proviso (b) to Section 138.
The explanation appended to the section provides, that
the debt or other liability, for the purpose of that section
means a legally enforceable debt or other liability.
10. The authorized representative of complainant by
name Abhishek is examined as PW.1 by filing his affidavit
evidence in lieu of oral evidence, wherein, he has reiterated
the entire averments made in the complaint. In support of his
evidence, PW.1 got marked documents as Ex.P.1 to 12.
Ex.P.1 is the Copy of Distributor Agreement, Ex.P.2 is the
cheque stands in the name of complainant, Ex.P.3 is the
bank return memo, Ex.P.4 is the Notice dated 21-05-2022,
Ex.P.5 and 6 are Postal receipts, Ex.P.7 & 8 are the returned
RPAD covers, Ex.P.9 is the Board Resolution, Ex.P.10 is the
twenty Tax invoice copies, Ex.P.11 is the Customer ledger
account copy and Ex.P.12 is the Balance confirmation letter.
Ex.P.12(a) to (c) are signatures of the accused. Thus, the
complainant has complied with the mandatory requirements
of section 138 of Negotiable Instruments Act. Therefore, the
presumptions can be drawn in his favour as contemplated
U/s 118 and 138 of the Negotiable Instruments Act.
11. The presumption referred to in section 139 of N.
I. Act is a mandatory presumption and not a general
presumption, but the accused is entitled to rebut the said
SCCH-21 6 C.C. No.54729/2022
presumption. What is required to be establish by the
accused in order to rebut the presumption is different from
each case under given circumstances. However, the fact
remains that a mere plausible explanation is not expected
from the accused and it must be more than a plausible
explanation by way of rebuttal evidence. The defence raised
by the accused by way of rebuttal evidence, must be
probable and capable of being accepted by the court.
12. No doubt the initial mandatory statutory
presumption as provided under sections 118 and 139 of N. I.
Act are in favour of the complainant. However, they are
rebuttable presumptions and the accused is expected to
rebut the presumption by raising a probable defence.
13. On the other hand, accused No.2 examined as
DW.1 and got marked Ex.D.1 to Ex.D.9. In his evidence he
as taken defence that, complainant has taken the cheque in
question forcibly for the security purpose and he has paid all
the dues to the complainant.
14. Keeping in view of aforesaid documentary
evidence, now I proceed to discuss the other materials
available on record. It is the specific case of the complainant
that, it is a Private Limited company incorporated under the
Indian Companies Act and engaged in the business of
manufacturing of Spring Mattresses and Pillows. The
accused No.1 being one of the Distributors of the Complainant
represented by accused No.1 has placed certain orders and
SCCH-21 7 C.C. No.54729/2022
purchased the Mattresses, Pillows and Accessories on
Invoice basis. The said fact is not disputed by the accused.
As such, there is no dispute regarding the business
relationship between the complainant and accused.
15. The records shows that, the complainant company
has adduced its evidence through its official namely
Abhishek, Senior Admin Officer. As per the Ex.P.9 i.e., Board
Resolution, shows that, the complainant company has
authorized the said Abhishek to prosecute this case for and
on behalf of the complainant company. As such, PW.1 has
power to represent the complainant company.
16. The next question would be, Whether the cheque in
question belongs to accused person or not. On going through
the cross-examination of PW.1 as well as evidence of DW.1 it
clearly reveals that, accused has taken defence that,
complainant has taken cheque in question for the security
purpose and also he has taken defence that officials of
complainant have taken the cheque in question forcibly for
the security purpose. As such, the above admission are
sufficient to conclude that, the cheque in question belongs to
the accused and cheque in question bears the signature of
the accused No.2.
17. As such, having gone through the defence raised
by the accused, they have not disputed that cheque in
question and signature thereon. It is well settled that, when
once the issuance of the cheque and signature is admitted,
SCCH-21 8 C.C. No.54729/2022
the presumption as contemplated U/s 139 of N. I. Act has to
be raised in favour of the complainant. The course open to
the accused is to rebut the said presumption by raising a
probable defence. In this context of matter, it is useful to
refer the decision of the Hon’ble Apex Court in APS FOREX
SERVICES PRIVATE LTD., V/S SHAKTHI
INTERNATIONAL FASHION LINKERS AND OTHERS
reported in AIR 2020 Supreme Court 945, wherein, it
has been observed and held that once the issuance and the
signature of the cheque/s is admitted, there is always
presumption in favour of complainant that there exists
legally enforceable debt or liability.
18. It is also profitable to refer another decision of
the Hon’ble Apex Court in P.RASIYA V/S ABDUL NAZEER
AND ANOTHER reported in 2022 SCC Online Supreme
Court 1131, wherein, it has been observed and held that
once the initial burden is discharged by the complainant,
that the cheque was issued by the accused and signature of
the accused on the cheque is not disputed, then in that case,
the onus will shift upon the accused to prove the contrary
that the cheque was not for discharge or any debt or other
liability.
19. Accused has taken defence that, he has returned
the goods which are shown at Ex.D.5 to Ex.D.9. Ex.D.5 is
the debit note, which depicts that, accused has returned 35
items of Rs.5,06,492.58, likewise Ex.D.6 is the debit note,
which deficts that, accused has returned 05 items of
Rs.1,22,323.52 likewise Ex.D.7 is the debit note, which
SCCH-21 9 C.C. No.54729/2022
depicts that, accused has returned 39 items of
Rs.6,06,662/-, likewise Ex.D.8 is the debit note, which
depicts that, accused has returned 08 items of Rs.13,143/-,
likewise Ex.D.9 is the debit note, which depicts that,
accused has returned 67 items of Rs.71,750/-. All the above
debit notes are dated 12.09.2021. But on going through the
Ex.P.11 i.e., customer account ledger extract maintained by
the complainant reveals that, the said amount was deducted
by the complainant and as on 04.02.2022 the outstanding
amount was Rs.24,05,939.48.
20. The next question would be, whether so much of
money was really due to be paid by the accused to the
complainant. To substantiate this fact, the complainant has
produced 20 Invoices. On careful perusal of the said Tax
Invoices, it reveals that, complainant has supplied the
materials to the accused. Further, in the said Tax Invoices
the description of goods is also mentioned. These documents
are sufficient to conclude that, complainant company has
supplied the goods mentioned under the above Tax Invoices
from 18.07.2021 to 28.08.2021. Further, on perusal of
Ex.P.11 the outstanding amount payable by the accused is
shown as Rs.24,05,939.48. In addition to that, during the
cross-examination of DW.1, he himself admits that, he has
endorsed the signature on balance confirmation letter issued
by the complainant and same was marked as Ex.P.12. As
per the said confirmation letter accused himself admits
about the outstanding amount payable by him to the
complainant to the extent of Rs.22,34,197/-. Further, in his
SCCH-21 10 C.C. No.54729/2022
cross examination DW.1 himself admits that, after signing of
Ex.P.12, he has done business with complainant company.
But he has taken defence that, he has repaid all the amount.
Admittedly, accused has not produced any document to
show that he has repaid the said amount to the complainant
company. The above discussions makes it clear that,
accused has issued the cheque in question for the amount
mentioned in the cheque. In this case, accused has taken
defence that, complainant has taken his signature forcibly.
But accused himself admits in his evidence that, he has not
initiated any legal proceedings against the complainant.
This shows that, accused has not taken any positive steps
against the complainant to recover the cheque. Here it is
relevant to note that, no prudent man or woman could issue
a cheque unless there is a liability under it. Hence, this
Court opine that, accused is under liability to pay the
amount as mentioned in the cheque in question.
21. It is the case of the accused that the cheque in question
was given to the complainant as security. However, it is
apposite to mention that the accused has not brought any
evidence to fortify the fact that he has given cheque in
question as security to the complainant and not relied on
any documents to this effect. It is settled principle of law
that, mere suggestion to the witness that cheque was issued
as security or mere explanation given in the statement of
accused under Section 313 of Cr.P.C or at the time of
recording the plea, that the cheque was issued as security,
does not amount to proof.
SCCH-21 11 C.C. No.54729/2022
22. The Hon’ble Supreme Court in Sripati Singh
(since deceased) through his son Gaurav Singh v. State
of Jharkhand and Anr., CRIMINAL APPEAL NOS. 1269-
1270 OF 2021, decided on 28.10.2021 has held that:
“A cheque issued as security pursuant to a
financial transaction cannot be considered as a
worthless piece of paper under every
circumstance. ‘Security’ in its true sense is the
state of being safe and the security given for a
loan is something given as a pledge of payment. It
is given, deposited or pledged to make certain the
fulfilment of an obligation to which the parties to
the transaction are bound. If in a transaction, a
loan is advanced and the borrower agrees to
repay the amount in a specified time frame and
issues a cheque as security to secure such
repayment; if the loan amount is not repaid in any
other form before the due date or if there is no
other understanding or agreement between the
parties to defer the payment of amount, the
cheque which is issued as security would mature
for presentation and the drawee of the cheque
would be entitled to present the same. On such
presentation, if the same is dishonoured, the
consequences contemplated under Section 138
and the other provisions of N. I. Act would flow”
SCCH-21 12 C.C. No.54729/2022
23. It is pertinent to note that no proof has been
furnished by the accused to establish his defence. It is
settled law that the presumption under section 139 of NI Act
cannot be rebutted upon a mere denial. The same can be
rebutted by the accused only by leading cogent evidence.
Thus, on the mere averment of the accused unsubstantiated
by any cogent evidence, it is not proved that the cheque in
question was given as security only and not for any legally
enforceable debt/liability. Moreover, even for a moment, if it
is believed that the cheque in question was given for security
purpose, neither the accused demanded the complaint to
return his cheque nor he issued any notice for the same.
Accused has not place on record any document or examined
any witness which proves that he has given the cheque in
question as security cheque against the goods supplied.
Accordingly, this defence of accused is holds no water.
24. It is settled law that the presumption under section
139 of N. I. Act cannot be rebutted upon a mere bald
assertion. The same can be rebutted by the accused only by
leading cogent evidence. With respect to the contents of the
cheque, even if it assumed to be true that, the contents of the
cheque was not filled by him, it is settled law that filling of
particulars of cheque by any person other than the drawer
does not invalidate the cheque and shall still attract the
presumption under Section 139 of the N. I. Act. The same
was held by the Hon’ble Supreme Court of India in the
decision Bir Singh vs Mukesh Kumar (2019) 4 SCC 197.
SCCH-21 13 C.C. No.54729/2022
25. Section 20 N. I. Act talks of “inchoate stamped
instruments” and states that if a person signs and delivers a
paper stamped in accordance with the law and “either
wholly blank or have written thereon an incomplete
negotiable instrument” such person thereby gives prima
facie authority to the holder thereof “to make or complete as
the case may be upon it, a negotiable instrument for any
amount specified therein and not exceeding the amount
covered by the stamp.” Section 49 permits the holder of a
negotiable instrument endorsed in blank to fill up the said
instrument” by writing upon the endorsement, a direction to
pay any other person as endorsee and to complete the
endorsement into a blank cheque, it makes it clear that by
doing that the holder does not thereby incurred the
responsibility of an endorser.” Likewise Section 86 states
that where the holder acquiesces in a qualified acceptance,
or one limited to part of the sum mentioned in the bill, or
which substitutes a different place or time for payment, or
which, where the drawees are not partners, is not signed by
all the drawees, all previous parties whose consent has not
been obtained to such acceptance would stand discharged
as against the holder and those claiming under him, unless
on notice given by the holder they assent to such
acceptance. Section 125 N. I. Act permits the holder of an
uncrossed cheque to cross it and that would not render the
cheque invalid for the purposes of presentation for payment.
These provisions indicate that under the scheme of the NI
Act an incomplete cheque which is subsequently filled up as
to the name, date and amount is not rendered void only
SCCH-21 14 C.C. No.54729/2022
because it was so done after the cheque was signed and
delivered to the holder in due course.
26. A collective reading of the above provisions shows
that even under the scheme of the N. I. Act it is possible for
the drawer of a cheque to give a blank cheque signed by him
to the payee and consent either impliedly or expressly to the
said cheque being filled up at a subsequent point in time
and presented for payment by the drawee.”
27. Therefore, in consonance with the holding of the
Hon’ble Supreme Court, it is the considered opinion of this
Court that merely because the other details of the cheque in
question were not filled in by the accused, the accused
cannot take the defence that there was no liability that had
accrued on his part towards the complainant.
28. For the foregoing reasons, I hold that the materials
available on record are sufficient to conclude that the
accused is liable to pay amount to the complainant and to
discharge the said amount the accused have issued the
cheque in question to the complainant, but the cheque so
issued has been dishonored and returned for the reasons
“funds insufficient.” Hence, I hold that the materials
available on record inspire the confidence of the Court to
conclude that the accused has committed the offence u/s
138 of N. I. Act. Hence, Point No.1 is answered in the
affirmative.
SCCH-21 15 C.C. No.54729/2022
29. POINT No.2: Section 138 of N. I. Act empowers the
Court to sentence the accused upto two years and also to
impose fine which may extend to twice the amount of cheque
or with both. This cheque in question was issued on
20.04.2022 for Rs.24,05,940/-. The complainant was
deprived of money that was rightfully due to it for a period
of 03 years. Hence, if the interest is calculated at 9% p.a.
on the cheque amount for the above period certainly the
complainant is entitled for suitable compensation to the
cheque amount as per Sec.80 of N. I. Act. Hence, in this
case Rs.24,05,940/- is the cheque amount and interest at
9% for Rs.24,05,940/- if calculated will amounts to
Rs.6,49,584/- as the case is pending clearly about 36
month and as such the total amount including interest will
be of Rs.30,55,524/-.
30. However, having regard to the facts of the case
and the amount involved, there are no warranting
circumstances to award the sentence of imprisonment as
substantive sentence. Directing the accused to pay fine and
also awarding compensation to the complainant would meet
the ends of justice. But adequate default sentence shall
have to be imposed to ensure the recovery of fine imposed to
the accused. Therefore, the complainant is required to be
suitably compensated as per Section 80 and 117 of the
Negotiable Instrument Act and also appropriate in default
sentence. Accordingly, I pass the following:
SCCH-21 16 C.C. No.54729/2022
ORDER
Acting U/Sec.255(2) of Cr.P.C. the
accused is found guilty for the offence
punishable under Sec.138 of N. I. Act and
he is sentenced to pay a fine of
Rs.30,55,524 /- to the Complainant.
In default to pay fine, the accused
No.2 shall undergo simple imprisonment for
a period of six months.
Further, acting U/Sec.357(1)(b) of
Cr.P.C., on recovery of entire fine amount, a
sum of Rs.30,55,524/- shall be paid as
compensation to the complainant.
The office is directed to supply a free
copy of judgment to the accused.
(Dictated to the Stenographer directly on computer, typed
by her, same is corrected, signed and then pronounced by me in
the Open Court on this the 02nd day of August, 2025)(VIJAYKUMAR S. HIREMATH)
XVII ADDL. JUDGE,
Court of Small Causes &
ACMM, Mayo Hall Unit, Bengaluru.
ANNEXURE
List of witnesses examined on behalf of the
complainant:
P.W.1 : Sri. S. Abhishek.
List of documents marked on behalf of the
complainant:
Ex.P.1 : Distributor agreement
Ex.P.2 : Cheque
Ex.P.3 : Bank Endorsement
SCCH-21 17 C.C. No.54729/2022
Ex.P.4 : Office copy of legal notice
Ex.P.5 & 6 : Postal receipts
Ex.P.7 & 8 : Returned RPAD covers
Ex.P.9 : Board Resolution
Ex.P.10 : 20 Invoice copies
Ex.P.11 : Customer Ledger
Ex.P.12 : Balance confirmation letter
List of witnesses examined on behalf of the accused:
DW.1 : Sri.Vankat Rameshwar Potharaju
List of documents marked on behalf of the accused:
Ex.D.1 : Distributors final settlement details
Ex.D.2 : Difference in ledger balances
Ex.D.3 : Email copy
Ex.D.4 : SBI account statement
Ex.D.5 to 9 : Copies of debit note(VIJAYKUMAR S. HIREMATH)
XVII ADDL. JUDGE,
Court of Small Causes &
ACMM, Mayo Hall Unit, Bengaluru.
* * *