Bengaluru court orders ex-Army man to pay Rs 15 lakh to former batchmate in cheque bounce case

Fine of Rs 15.7 lakh

• Holding the accused guilty under Section 138 of the Negotiable Instruments Act, the court sentenced him to pay a fine of Rs 15.7 lakh.
• Out of this amount, Rs 15.6 lakh has been directed to be paid to the complainant as compensation, while Rs 10,000 will go to the state towards expenses.
• The Bengaluru court further ordered that in default of payment of the fine amount, the accused would undergo simple imprisonment for six months.
• It also clarified that undergoing the default sentence would not absolve the accused of his liability to pay compensation to the complainant.

Loan between former Army batchmates

According to the complaint, the accused and Michael, a retired Captain of the Indian Army, were acquainted with each other from their days of military service and belonged to the same batch.

The accused allegedly approached the complainant in 2021 seeking financial assistance, following which Michael advanced a total sum of Rs 21 lakh as a hand loan on the basis of personal trust and belief.

The Bengaluru court noted that the parties later executed a hand loan agreement dated May 5, 2023, under which the accused agreed to repay the amount by May 15, 2023.

However, only Rs 8 lakh was repaid through transactions routed from the bank accounts of the accused’s relatives and friends, leaving a balance of Rs 13 lakh unpaid.

Cheque returned due to ‘funds insufficient’

• To clear the outstanding liability, the accused issued a cheque dated June 15, 2024, for Rs 13 lakh drawn on the State Bank of India’s (SBI) Akshayanagar branch in Bengaluru.
• The cheque, when presented for encashment through the complainant’s bank, was dishonoured on the same day with the endorsement “Funds Insufficient”, the Bengaluru court noted.
• Following the dishonour, the complainant issued a legal notice dated June 21, 2024, demanding payment of the cheque amount.
• The notice was served on the accused on June 26, 2024, but he failed to comply with the demand within the stipulated period, prompting the filing of the criminal complaint.

Accused did not cross-examine complainant

• During the trial before the Bengaluru court, Michael examined himself as a witness and produced documentary evidence, including the original cheque, bank endorsement, legal notice, postal records, hand loan agreement and bank account statements.
• The magistrate observed that although the accused appeared before the court and denied the allegations, he neither cross-examined the complainant nor led any defence evidence.
• The court also recorded that the accused did not dispute that the cheque belonged to his bank account or that the signature appearing on it was his.

Court relies on Supreme Court precedents

Referring to Supreme Court rulings, including Rangappa v Sri Mohan, Bir Singh v Mukesh Kumar and Basalingappa v Mudibasappa, the Bengaluru court reiterated that once the issuance and signature on the cheque are admitted, presumptions under sections 118 (presumptions as to negotiable instruments) and 139 (presumption in favour of holder) of the Negotiable Instruments Act arise in favour of the complainant unless effectively rebutted by the accused.