- 1 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF APRIL, 2026 BEFORE THE HON'BLE MR. JUSTICE V SRISHANANDA CRIMINAL REVISION PETITION NO. 260 OF 2026 BETWEEN: SYED MEHABOOBPASHA S/O SYED UBEDULLA, AGED ABOUT 31 YEARS, R/AT NO.47, 3RD CROSS, RAVINDRANAGARA, T DASARAHALLI, BANGALORE - 560 057. &PETITIONER (BY SRI. MAHESH S.N., ADVOCATE) AND: SMT KOUSHALYA W/O LATE M SUBRAMANI, AGED ABOUT 69 YEARS, R/AT NO. 2031, KMS NILAYA, S RAMESH ROAD, T DASARAHALLI, BANGALORE - 560 057 &RESPONDENT (BY SRI. BABU T.C., ADVOCATE) THIS CRL.RP IS FILED U/S.397 R/W 401 CR.P.C (U/S 438 R/W 442 BNSS) PRAYING THAT THIS HONOURABLE COURT MAY BE PLEASED TO SET-ASIDE THE ORDER PASSED BY THE HONBLE LVIII ADDL. CITY CIVIL AND SESSIONS JUDGE, AT BANGALORE (CCH-59) IN CRL.A.NO.817/2024, DATED 10-11- Digitally signed by SHARADAVANI B Location: High Court of Karnataka - 2 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 2025 AND C.C. NO. 21153/2021, DATED 16-04-2024 FOR THE OFFENCE U/S.138 OF N.I. ACT PASSED BY THE HON'BLE XII ADDL. CHIEF JUDICIAL MAGISTRATE AT BANGALORE. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE V SRISHANANDA ORAL ORDER Heard Sri. Mahesh S.N. and Sri. Babu T.C. learned counsel for the parties. 2. The Revision petitioner is the accused, who suffered an order of conviction for the offence punishable under Section 138 of Negotiable Instruments Act, 1881 (hereinafter referred to as 8N.I. Act9 for short) passed by the XII Additional CMM Bengaluru in C.C.No.21153/2021 dated 16.04.2024 which came to be modified by the LVIII Additional City Civil and Sessions Judge, Bengaluru in Crl.A.No.817/2024 dated 10.11.2025. 3. Facts in the nutshell which are utmost necessary for disposal of the present revision petition are as under: - 3 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 A complaint came to be lodged by the respondent/complainant under Section 206 of Code of Criminal Procedure, 1973 (here in after referred to as 8Cr.P.C.9 for short) alleging an offence punishable under Section 138 of N.I. Act by contending that complainant and accused are known to each other for seven years. Accused9s father was a real estate agent and complainant wanted to purchase a site through his father9s contacts. 4. On account of their acquaintance, in the month of February, 2019 accused approached the complainant for a hand loan of Rs.7,00,000/- to discharge the financial liabilities with a promise to repay the same. The complainant lent a sum of Rs.7,00,000/- and towards the repayment of the same accused issued three cheques bearing Nos.007878 in a sum of Rs.3,00,000/-, No.007879 in a sum of Rs.2,00,000/- and No.007880 in a sum of Rs.2,00,000/- all dated 01.12.2020. - 4 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 5. When the complainant presented the cheques to the banker for collection the cheques got dishonoured with an endorsement dated 05.12.2020 as 8account is frozen9. 6. However, the complainant again presented those cheques for encashment on 17.12.2020, again they came to be returned with an endorsement 8account is frozen9. Thereafter complainant got issued a legal notice on 13.01.2021 calling upon the accused to pay the amount within 15 days. There was no compliance to the callings of notice and therefore action was initiated. 7. Learned trial Magistrate after completing the necessary formalities, as per the directions issued by the Hon9ble Apex Court in the case of Indian Bank Association Vs. Union of India reported in 2014 (5) SCC 590, posted the matter for recording the statement of the accused under Section 313 of Cr.P.C. and permitted the accused to cross-examine PW-1 treating the affidavit - 5 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 filed along with the complaint as the examination 3in- chief. In cross-examination of complainant there were no answers elicited except the fact that the cheques were returned with an endorsement 8account frozen9. 8. In order to rebut the presumption available to the complainant, accused got examined himself as DW-1, however did not chose to place any material documents on record. In the cross-examination of DW-1, it has been elicited that he does not remember when the account is frozen and police had not issued any summons to him. He admits that the complainant had purchased one site from his father about seven years earlier. 9. Accused has also admitted his signatures in the cheques at Exs.P.1 to P.3 and after issuance of the cheques, he has issued stop payment instructions to the Bank as there was no legally recoverable debt. He has stated that he has issued a reply notice through his advocate. To the question No.5, in the accused statement, - 6 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 accused has answered that complainant had no transaction with him and in the police station the cheques were extracted forcibly. 10. Learned trial Magistrate taking note of these aspects of the matter, recorded a categorical finding that the defence evidence placed on record by the accused was not sufficient to rebut the presumption available to the complainant and thus convicted the accused and sentenced as under: <ORDER In exercise of powers conferred under section 255(2) of Cr.P.C. the accused is convicted for the offence punishable under section 138 of The Negotiable Instruments Act. The accused is sentenced to pay fine of Rs.7,55,000/- and in default he shall undergo simple imprisonment for the term of 6 months. Out of the fine amount of Rs.7,55,000/- a sum of Rs.7,50,000/- is ordered to be compensation to the complainant towards compensation under section 357 of Cr.P.C. and the balance amount of Rs.5,000/- shall be remitted to state as defraying expenses. Office is directed to supply free copy of the judgment to the accused.= - 7 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 11. Accused filed an appeal challenging the order of the trial Magistrate in Crl.A.No.817/2024. Learned Judge in the first Appellate Court after securing the records, heard the arguments of the parties, modified the sentence by directing the accused to pay sum of Rs.7,00,000/- with 9% interest from the date of cheques till the date of realization. 12. Being further aggrieved by the same, accused is before this Court. 13. Sri. Mahesh S.N. learned counsel appearing for the revision petitioner after reiterating the grounds urged in the petition has vehemently contended that the very initiation of criminal proceedings under Section 138 of the N.I. Act itself is impermissible, when the cheques itself have been dishonoured with an endorsement 8account forzen9 and therefore sought for allowing the revision petition. - 8 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 14. In support of his arguments, he placed reliance on the order of the Co-ordinate Bench of this Court in Crl.P.No. 11207/2025 dated 04.01.2020 in the case of M/s. N.D. Developers Pvt., Ltd., and others Vs. Ritesh Raushan. 15. He invited the attention of this Court to paragraph No.8.2 of the order in M/s. N.D. Developers (supra). In the said order, the Co-ordinate Bench of this Court has cited the judgment of High Court of Punjab and Haryana in the case of Rajesh Meena v. State of Haryana reported in 2019 SCC OnLine P&H 6256, wherein paragraph Nos.24 to 27 read as under: <24. At this stage, it will be necessary to note the pleadings in the impugned complaint relating to the legal notice served by the complainant and the reply sent by the accused. The relevant pleadings of the complaint reads as under: "10. That upon receipt of written intimation of dishonour of cheques of the aforesaid cheques from the banker of accused, the complainant got served legal notice dated October 4, 2017 under sections 138, 141 and 142 of the NI Act. Vide this notice, the accused persons were called upon to make payment of above said dishonoured cheques to the complainant - 9 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 within a period of 15 days from the date of receipt of this notice. The said legal notice was dispatched vide registered acknowledgment due post dated October 6, 2017 on last known and correct addresses of the accused persons. The said legal notice was duly served upon the accused persons on October 9, 2017 in the ordinary course of postal delivery. The accused persons instead making payment got issued false and frivolous reply dated October 16, 2017 through their counsel. The alleged provision of law as cited in false and frivolous reply dated October 16, 2017 is not applicable and false defence has been put forth to evade legitimate payment of the complainant." 25. A perusal of the above makes it clear that the complainant did not disclose the contents of the reply dated October 16, 2017 and drew a veil over this important aspect of the case. 26. The said reply dated October 16, 2017 (annexure P4) clearly revealed that because of prohibitory orders by the National Company Law Tribunal, New Delhi, the account in question stood blocked and therefore, the request was made to the complainant to withdraw the legal notice. It was further requested that as and when the accused would get the permission to operate the account of the company, the payment in respect of the cheques in question would be made to the complainant. It is also relevant to note that the said reply also contains a specific averment that intervention by the company-National Company Law Tribunal was conveyed to the complainant even before the presentation of the cheque and request was made to the complainant to not to present the cheque. The reply dated October 16, 2017 (annexure P4) is reproduced below: - 10 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 "1. That paragraph No. 1 of your legal notice is admitted hence needs no reply. 2. That paragraph No. 2 of your legal notice is correct and admitted. 3. That paragraph No. 3 of your legal notice is correct and admitted. 4. That paragraph No. 4 of your legal notice is correct and admitted. 5. That paragraph No. 5 of your legal notice it is submitted that my client intimated you not to present the above said cheques because the hon'ble National Company Law Tribunal, New Delhi vide order dated July 21, 2017 have blocked the account as well as moveable and immovable properties of my client under section 7 of the Insolvency and Bankruptcy Code, 2016 read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The copy of the order dated July 21, 2017 is attached herewith. 6. That in reply to paragraph No. 6 of your legal notice it is submitted that my client has replied above in detail in paragraph No. 5 of the reply. 7. That paragraph No. 7 of your legal notice is wrong and denied. My client had not guilty intention from the inception and my client dishonestly with a view to cause wrongful loss to your client. 8. That paragraph No. 8 of your legal notice is matter of record. I through this legal notice all upon you to advise your client to withdraw the above said legal notice because my - 11 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 client will pay the amount of cheques as and when my client do the work and the hon'ble National Company Law Tribunal, New Delhi give permission to operate the account of the company." 27. The above averment in the present petition is not refuted either by way of filing the reply or by way of oral arguments. The only stand adopted by the respondent is that since the cheque is dishonoured, therefore, the prosecution of the petitioner accused is inevitable. In the given facts, this court has no hesitation in holding that on the date when the cheques were presented by the complainant to the drawee-bank, the account holder was not maintaining the said account. Resultantly, in the absence of this material condition it cannot be said that the offence punishable under section 138 of the NI Act would be made out.= 16. Per contra, learned counsel for the respondent supports the impugned judgments. 17. Having heard the arguments of both the side this Court perused the material placed on record meticulously. 18. On such perusal of the material on record, this Court noted that Exs.P.1 to P.3 belongs to the accused and signatures found therein are that of the accused. - 12 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 According to the accused, the cheques were extracted in the police station upon the complaint lodged by the complainant. 19. In the detailed cross-examination of DW-1, accused has pleaded ignorance about the date of he being summoned to the police station pursuant to the complaint lodged by the complainant. However, no such complaint is forthcoming on record nor any specific date is mentioned by the accused as to when he was summoned and forcibly cheques at Exs.P.1 to P.3 were extracted. 20. Thus, when issuance of the cheques and signatures are not disputed, the complainant enjoys the presumption available to her under Section 139 of the N.I. Act. Even according to the accused, the complainant is not a stranger as she had transactions with his father. 21. As per the Section 139 of the N.I. Act, the accused has to place on record material evidence to rebut the presumption. In the present case, except the oral - 13 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 testimony of the accused that cheques were forcibly extracted in the police station, no other material evidence is forthcoming. 22. Now turning to the technical point that the learned counsel for the petitioner urged before this Court that the offence punishable under Section 138 N.I. Act would not get attracted in the case of an endorsement 8account frozen9, this Court bestowed its attention to the judgment rendered by the Co-ordinate Bench of this Court in the case of M/s. N.D. Developers (supra). In the said case, the account was frozen under the instructions of a statutory authority. 23. In the case on hand, no such orders have been received by the banker to freeze the account by any statutory authority or the Court order. It was the accused who is responsible for freezing the account as he failed to adhere to the terms of the contract with his banker. - 14 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 24. Under such circumstances, the accused cannot take advantage of the endorsement 8account frozen9. Further, according to accused, he issued stop payment instructions to the banker soon after the cheques were extracted in the police station. But the cheques were not dishonoured with an endorsement that 8payment stopped by the drawer9 but they were dishonoured with an endorsement 8account frozen9. 25. It is also to be noted that, even in case of a stop payment instructions, it is necessary for the account holder to make available the amount covered under the cheque in his account as balance and then only the stop payment instructions can be acted upon. 26. In the case on hand, the account is frozen by the banker of the accused as he failed to maintain the minimum balance and did not even pay the minimum account maintenance charges. - 15 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 27. Thus, the argument put-forth by the accused that there was no offence committed under Section 138 of the N.I. Act in view of the endorsement 8account frozen9 cannot be countenanced in law. As such, order of conviction recorded by the trial Magistrate, confirmed by the first Appellate Court needs no interference, that too, under the limited revisional jurisdiction. 28. Having said so, learned Judge of the first Appellate Court committed an error in granting 9% interest which is per se impermissible having regard to the scheme of Section 138 of the N.I. Act. All that the trial Magistrate or the first appellate Court can exercise their power is to order for double the cheque amount or suitable payment of the fine amount or a portion of which would be paid as compensation to the complainant for the offence committed under Section 138 of N.I. Act or paying the cheque amount plus some fine amount as compensation to the complainant. - 16 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 29. Thus, the order of the first appellate Court awarding 9% interest on a sum of Rs.7,00,000/- needs to be set aside and the order of the learned trial Magistrate needs to be restored. 30. Accordingly, the following: ORDER (i) The Revision petition is allowed in part. (ii) While maintaining the conviction of the accused for the offence punishable under Section 138 of the Negotiable Instruments Act, awarding of 9% interest by the first Appellate Court in Crl.A.No.817/2024 dated 10.11.2025 is hereby set aside and order of the trial Magistrate in C.C.No.21153/2021 dated 16.04.2024 awarding the fine amount of Rs.7,55,000/- is hereby maintained. - 17 - HC-KAR NC: 2026:KHC:18138 CRL.RP No. 260 of 2026 Office is directed to return the trial Court records with a copy of this order for issue of modified conviction order. Ordered accordingly. Sd/- (V SRISHANANDA) JUDGE BVK; List No.: 1 Sl No.: 17