Bangalore District Court
M/S. Sree Gowri Ganeshaa Chits Pvt Ltd vs K P Ramesh on 24 July, 2025
KABC0B0068242023
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, B.A.LL.B.,
XVII ADDL. JUDGE, Court of Small
Causes & A.C.M.M., Bengaluru.
Dated: This the 24th Day of July-2025
C.C. No.53277/2022
Complainant/s : M/s. Sree Gowri Ganeshaa Chits Pvt.,
Ltd., No.307, 1st Floor, 2nd Main, 7th Cross,
Domlur layout, Bengaluru-560071,
Represented by its GPA holder
Sri. Shivakumar S. S/o. Late. Subbaiah,
Aged about 34 years.
(By Sri. B. V. Nagabhushana, Adv.,)
V/s.
Accused/s : Mr. K. P. Ramesh S/o Pappe Gowda
Aged about 50 years,
#09, 1st Floor, 1st Cross,
1st Main, Azad Najara,
Chamaraj Pet, Bangalore-560018.
(By Smt. K. Hemavathi., Adv.,)
SCCH-21 2 C.C. No.53277/2022
Date of institution of the : 04.06.2021
Complaint
Nature of the Complaint : U/Sec.138 of N.I. Act
Date of commencement of : 27.05.2022
recording of the evidence
Date on which the Judgment : 24.07.2025
was pronounced
Duration of the Complaint Year/s Month/s Day/s
04 01 20
JUDGMENT
The accused in this case is tried for the 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:
The complainant is a corporate body, registered under
the Companies Act 1956, doing its Chit Business under the
Chits Funds Act 1982 and its registered and Corporate
Office of complainant is at Domlur Layout, Bengaluru and
its one of Branch Offices is at RT Nagar and it is doing the
Chits Business.
One Chandrashekar. R is the subscriber in
complainant company and he entered into chit group ticket
No.GFL(4)-RTN-03-07 conducted by Complainant company
for the chit amount of Rs.5,00,000/- which is payable at
Rs.12,500/- p.m. for the period of 40 months and the said
SCCH-21 3 C.C. No.53277/2022subscriber after participating in the chit auction, offered the
highest bid agreeing to forgo a sum of Rs.1,50,000/- as a
discount amount, which was duly confirmed by complainant
company and received the prize amount of Rs.1,79,375/- on
16-10-2015 by Complainant company and the accused has
offered guarantor for the due payment of the entire future
monthly installment due by said subscriber and stood as
surety to him. The accused executed required documents in
favour of complainant company as per law, such as On
Demand Promissory Note, Consideration Receipt, Surety
etc., to the satisfaction of the company, thereby making
liberty to the payment of the future monthly installments.
After receiving the prize amount, the said subscriber
had been irregular in making payment of the chit
installments and thereafter he became defaulter. After
several reminder, request and visit of the representative of
complainant company, accused has issued a cheque
bearing No.339028 dtd:31.03.2021 for a sum of
Rs.5,95,000/- drawn on Karnataka State Co-op Apex Bank
Ltd., Head office branch, Bangalore in favour of
Complainant company for discharging his liability and while
issuing the said cheque the accused has assured that the
said cheque will be honoured on its presentation to the
Bank. It is further stated that the representative of
complainant company presented the said cheque for
encashment on 07-04-2022 through its Banker i.e., Union
Bank of India, Domlur Branch, Bengaluru, but it was
returned with the reason “Funds Insufficient” by the
SCCH-21 4 C.C. No.53277/2022endorsement dtd:02.04.2021. While issuing the said
cheque the accused was fully aware that it will be bounced/
returned and the accused had no sufficient funds in his
account and he has cheated the Complainant company and
the accused has committed an offence punishable under
the provision of Negotiable Instruments Act. It is further
stated that from the endorsement of the Bank, it is evident
that the accused has not made any arrangement for
honouring the said cheque issued by him to the
complainant company, the representative of complainant
company, after receiving the Bank endorsement, got issued
a legal notice dtd: 20-04-2021 through registered post
calling upon the accused to pay the said cheque amount of
Rs.5,95,000/- along with cost within 15 days from the
receipt of the said notice and the notice was served on the
accused on 07.05.2021. The accused has failed to repay
the cheque amount.
3. On filing of the complaint, cognizance was taken
for the 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 he was summoned. The
substance of accusation is stated to the accused and his
plea was recorded. Accused pleaded not guilty and
submitted that he has defence to make.
SCCH-21 5 C.C. No.53277/2022
4. In support of the Complainant’s case, the sworn
statement filed by the GPA holder of the Complainant by
way of affidavit during the pre-summoning stage is
considered as evidence of the Complainant and Ex.P.1 to
Ex.P.12 documents are marked and during the course of
cross-examination learned advocate for accused confronted
one document which is marked as Ex.D.1 infavour of
accused. The statement of the accused is recorded under
Section 313 of Cr.P.C and his answers were recorded. The
accused got examined himself as DW.1 and during cross-
examination of DW-1, learned advocate for complainant
confronted a document which is marked at Ex.P.13 infavour
of complainant.
5. Heard the argument by the learned Counsel
appearing for the complainant and accused.
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:
SCCH-21 6 C.C. No.53277/2022
REASONS
8. POINT No.1: I am of the opinion that I need not
repeat the entire case of the complainant here also, since I
have already narrated the same at the inception of this
judgment.
9. Further, a careful reading it becomes very clear
that the section 138 of NI Act has three ingredients, which
are as follows:
(i) That there is legally enforceable debt.
(ii) That the cheque was drawn from the
account of Bank for discharge in whole
or in part of any debt or other liability
which pre-supposes a legally enforce
able debt.
(iii) That the cheque so issued had been
returned due to insufficiency of funds.
Keeping in view the main ingredients of section 138 of
NI Act, now I proceed to discuss the other materials
available on record.
10. In the present case, in order to substantiate his
case complainant has examined its GPA Holder 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 oral evidence, PW.1 has
produced cheque as per Ex.P.1, the Bank endorsement as
SCCH-21 7 C.C. No.53277/2022
per Ex.P.2, office copy of the Legal notice as per Ex.P.3,
Postal receipt as per Ex.P.4, Postal cover as per Ex.P.5,
Payment Voucher as per Ex.P.6, Consideration receipt as
per Ex.P.7, Promissory note as per Ex.P.8, Agreement as
per Ex.P.9, Surety proposal form as per Ex.P.10, Copy of
Board Resolution as per Ex.P.11 and Certified copy of GPA
as per Ex.P.12. On perusal of Ex.P.1 to Ex.P.12, it appears
that, 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. Such being the legal position, it would be
pertinent to refer the defense raised by the accused in
order to rebut the presumptions in favour of the
complainant. To substantiate his case accused himself
examined as DW-1. During cross examination of PW-1,
learned Counsel for accused confronted one document and
same was marked as Ex-D1. It is the case of the accused
that cheque in question ie blank signed cheque, was taken
by one R. Chandrashekar in the year 2015 and promise of
getting the residential site for him but when he received
the summons from the Court, then only he came to know
about the filing of this case against him through his lawyer.
Further he taken contention that he never went to the
Complainant Chit Fund and he has not issued the cheque to
SCCH-21 8 C.C. No.53277/2022
the Complainant on behalf of Chandrashekar. As such, he is
not liable to pay any amount to the complainant.
12. The learned counsel for complainant argued that,
R. Chandrashekar is the subscriber in complainant company
for the chit amount, he participated in chit auction, offered
the highest bid and agreeing to forgo a sum of
Rs.1,50,000/- and receive Rs.1,79,375/- by complainant
company and accused has offered guarantor for the said
amount. When subscriber failed to make payment
regularly, accused issued the cheque in question. On the
other hand, the learned counsel for accused argued that,
accused issued the cheque to Chandrashekar for the
purpose of site and he never issued the cheque to the
present complainant company.
13. In this case accused has not disputed his
signature on cheque in question. But he has taken defense
that he issued blank cheque to Chandrashekar. Admittedly
said Chandrashekar was the subscriber of Chit group ticket
No. GFL (4)-RTN-03/07. Further on perusal of Ex.P.8 to
Ex.P.10 i.e., the promissory note contains the signature of
the accused. Though accused denied that the said
signatures were not belongs to him. But accused has not
taken pain to prove the said fact, because in this case
reverse burden is on the accused to rebute the
presumption available in favour of the complainant since
this case is filed based upon the cheque. Morever as per
SCCH-21 9 C.C. No.53277/2022
Sec.20, 87 and 139 of N. I. Act, it is clear that, ‘a person
who signs a cheque and makes it over to the payee
remains liable unless he adduces evidence to rebut the
presumption that the cheque had not been issued for
payment of a debt or in discharge of a liability. It is
immaterial that the cheque may have been filled in by any
person other than the drawer, if the cheque is duly signed
by the drawer’. So, even a blank cheque voluntarily signed
and handed over by the accused towards some payment
would attract presumption u/s 139 of N. I. Act, in the
absence of any cogent evidence to show that, cheque was
not issued in discharge of debt.
14. In recent decision of Hon’ble Apex court in M/s
Kalamani Tex Vs. P. Balasubramanian reported in
(2021) 1 SCR 679, at para No.18, Hon’ble Apex court held
that, ‘even if we take the arguments raised by the
appellants only a blank cheque and signed blank stamp
papers were given to the respondent, yet the statutory
presumption cannot be obliterated’. So, in the light of
above decision as well as above discussion, law is well
settled that accused cannot get away by taking a bald
defence that, he has issued blank cheque infavour of
Chandrashekar and he never issued the said cheque
infavour complainant and complainant has misused the
same and therefore he is not liable u/s 138 of N. I. Act. On
the other hand, when the complainant primarily discharged
his burden on placing the cheque with the signature of the
SCCH-21 10 C.C. No.53277/2022
accused, then the presumption u/s 118 and 139 of N. I. Act
operates and it is for the accused to rebut the same.
15. Accused has taken defense that he has issued
blank cheque in question to Chandrashekar in the year
2015, who is well known to him with promise of getting
residential site for his family and only when he received the
summons from the Court he knew about the presentation of
the said cheque. In his evidence and application filed under
S.311 of Cr.P.C accused himself admits that Chandrashekar
is well known to him. Such being the case he has not
produced any evidence before this Court to show that, till
filing of this suit, accused has not taken any steps against
the said Chendrashekar to return his cheque and he has not
taken any positive steps regarding the said aspect. There is
no explanation from the accused that, why he kept silent
for all these days. Interestingly it is notice that accused is
also working in Banking Sector and also having knowledge
of business. It is implies, he is conversant with financial
transaction and consequences. If the Chandrashekar or
complainant misused the said cheque and had not return
the same, as a prudent man, the accused should have
inquired with the chit subscriber Chandrashekar and
demanded to return that cheque. No ordinary prudent man
would keep quite in such circumstances, without taking any
steps. The conduct of the accused is very unusual, because
he did not take any legal action against the said
Chandrashekar or complainant, even after filing of the
SCCH-21 11 C.C. No.53277/2022
complaint based on cheque. Further he could have issued a
notice to his banker to stop payment or legal notice to the
complainant or he could have given the complaint to the
concerned police station immediately. No such steps were
taken by the accused. He simply makes a bald allegation of
misuse of the cheque against the complainant. It appears,
just to escape from his legal liability, he has taken such
contentions without any valid basis. This being so, no one
can believe that accused has issued blank cheque to the
said Chandrashekar and in-turn he misused the same by
giving the same to the complainant company.
16. Learned Counsel for accused argued that
complainant has not pleaded in his complaint as well as
legal notice in respect of calculation of outstanding amount
payable by the Subscriber by name Chandrashekar. In
cases like this there is no compulsion on the complainant to
plead everything in his complainant and only issue before
this Court is that whether accused honour the cheque or
not and existence of liability as on the issuance of cheque.
To that extent complainant produced the documents before
this Court. In this regard I would like to relied upon a
judgment of Hon’ble Apex Court between P Rasiya V Abdul
Nazer in Criminal Appeal Nos.1233-35/2022 wherein
Hon’ble Apex Court held that in a cheque bounce case U/s.
138 of NI Act the complaint not required to spell out in the
complainant, nature of transaction, source of funds since
the onus is on the accused to prove that the cheque was
SCCH-21 12 C.C. No.53277/2022
issued not towards a debt or liability. Therefore in the light
of above decision there is no requirement for the
complainant to plead the outstanding amount in the
complainant and legal notice. As such the contention taken
by the learned Counsel for the accused holds no water.
17. Be that as it may, the accused avers in his cross
examination that after issuance of legal notice he
approached his advocate but his advocate has not advised
him for issuance of reply notice. As no reply was proffered
by the accused, thus, an inference, could arise that he had
no sustainable/valid defence to justify why the cheque in
question was dishonoured.
18. The accused in the present matter has not placed
any material to rebut the said presumption. Therefore, the
court can safely believe the case of complainant supported
by the statutory presumption as well as the documentary
evidence. Further, the accused admitted his signature on
the impugned cheque voluntarily. The burden lied heavily
on the accused to have probabalized the factum of either
proving that loan amount was paid by him and that he
owed no liability towards the complainant. It is not the case
of the accused that the complainant or subscriber
Chandrashekar obtained his signatures on the cheque
under duress or by exerting any pressure or undue
influence. It is the duty of the accused to lead positive
SCCH-21 13 C.C. No.53277/2022
evidence to show as to how a duly signed cheque came into
the custody of the complaint.
19. Learned Counsel for accused argued that PW-1
has made several contradiction statement in respect of chit
business. During cross examination of PW-1 learned
Counsel for accused more concentrated on the aspect of
business of chit group and conduct of bid. But nothing
culled out from the mouth of PW-1 that, subscriber has paid
all installments. Mere minor contradictions in respect of
amount in the statement of complainant or in the complaint
or in the complainant’s evidence, would not be sufficient to
disbelieve the version of the complainant, when he has
specifically proved that the aforesaid amount was given to
the subscriber.
20. On over all perusal of the materials on record, it
shows that, accused is guarantor to the Chandrashekar and
said Chandrashekar was the subscriber of chit under chit
group ticket No. GFL(4)-RTN-03/07 for Rs.5,00,000/- and
complainant paid Rs.1,79,375/- to the subscriber out of bid
amount of Rs.3,50,000/- by adjusting the remaining amount
for other chits as per the consent of the subscriber. Further,
accused has failed to prove that Chandrashekar has paid
entire amount to the complainant company. The accused
has not disputed the cheque and signature thereon. On
perusal of the materials on record, the accused has failed
to show that he has rebutted the presumption by raising
SCCH-21 14 C.C. No.53277/2022
probable defence. In the absence of the sufficient evidence
on record by the accused, the benefit of presumption as
contemplated U/s 118 and 139 of N. I. Act has to be drawn
in favour of the complainant. Accordingly, I answer
Point No.1 in the “Affirmative”.
21. 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
31.03.2021 for Rs.5,95,000/-. The complainant was
deprived of money that was rightfully due to it for a period
of 04 years. Hence, if the interest is calculated at 7% 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.5,95,000/- is the cheque amount and interest at 7%
for 48 months if calculated will amounts to Rs.1,66,600/-
as the case is pending clearly about 04 years and as such
the total amount including interest will be of
Rs.7,61,600/-.
22. 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
SCCH-21 15 C.C. No.53277/2022
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:
ORDER
Acting U/Sec.255(1) 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.7,61,600/- (Rupees Seven lakh sixty one
thousand six hundred Only).
In default to pay fine, the accused
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.7,61,600/- 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, same is
corrected, signed and then pronounced by me in the Open Court on
this the 24th day of July-2025)(VIJAYKUMAR S. HIREMATH)
XVII ADDL. JUDGE,
Court of Small Causes & ACMM,
Mayo Hall Unit, Bengaluru.
SCCH-21 16 C.C. No.53277/2022
ANNEXURE
List of witnesses examined on behalf of the
complainant:
P.W 1 : Sri. Shivakumar.S
List of documents marked on behalf of the
complainant:
Ex.P.1 : Cheque Ex.P.2 : Bank Endorsement Ex.P.3 : Office copy of Legal Notice Ex.P.4 : Postal Receipt Ex.P.5 : Postal Cover Ex.P.6 : Payment Voucher Ex.P.7 : Consideration Receipt Ex.P.8 : Promissory Note Ex.P.9 : Agreement Ex.P.10 : Surety Proposal Form Ex.P.11 : Copy of Board Resolution Ex.P.12 : Copy of GPA Ex.P.13 : Notarized copy of Aadhar Card
List of witnesses examined on behalf of the accused:
DW.1 : K. P. Ramesh
List of documents marked on behalf of the accused:
Ex.D1 : Copy of bank passbook
(VIJAYKUMAR S. HIREMATH)
XVII ADDL. JUDGE,
Court of Small Causes & ACMM,
Mayo Hall Unit, Bengaluru.