Mujeeb a Sharieff Vs Ajay Agarwal — Cheque Dishonour | Karnataka HC (2026)

Mujeeb a Sharieff Vs Ajay Agarwal — Cheque Dishonour | Karnataka HC (2026)

What the court decided

AI extract

Outcome

Dismissed

Issue for consideration

Whether the legal notice demanding Rs.2,00,00,000/- (cheque amount plus penalty) as against the cheque amount of Rs.1,00,00,000/- is defective and vitiates the proceedings for non-compliance with Section 138(b) NI Act. +3 more

Court's answer

Assuming a mistake in the notice insofar as a penalty of Rs.1,00,00,000/- was additionally sought along with the cheque amount, such over-demand does not vitiate the criminal proceedings, since if the cheque amount was due the accused could have paid it.

Ratio / Principle

Where a cheque is dishonoured with endorsement 'payment stopped by the drawer', it is necessary for the accused to place material evidence that sufficient balance was kept and that the stop-payment instruction was for a valid reason; on the record, no ground for the stop-payment instruction is forthcoming.

Key takeaways

The purpose of notice under Section 138 NI Act is to provide the honest and bona fide drawer an opportunity of fifteen days to make good the cheque amount.obiter¶43
In the cross-examination of PW-1 no valid answers were elicited so as to rebut the presumption available to the complainant under Section 139 NI Act.ratio¶35
As per the directions in Indian Bank Association, the trial should have commenced from the leading of defence evidence; but the accused, though he specifically answered question No.10 in his Section 313 statement that he would lead defence evidence, failed to lead any defence evidence.

Detailed headnote1 paragraphs

High Court of Karnataka (V Srishananda, J.) dismisses a criminal revision by the accused (Mujeeb A Sharieff) against concurrent findings convicting him under S.138 NI Act (cheque of Rs.1,00,00,000/- dated 15.01.2018, Canara Bank drawee replaced by Bharat Bank Ltd. Jayanagar Branch, dishonoured with endorsement 'payment stopped'; CC No.13363/2018, XVI ACMM Bengaluru, order dated 23.01.2023; confirmed in Crl.A.No.244/2023 by the LV Addl. City Civil and Sessions Court by judgment dated 23.10.2025). Held: (i) a legal notice demanding the cheque amount plus a further sum as penalty does not offend S.138(b) NI Act nor vitiate the proceedings; (ii) on a 'payment stopped' dishonour the drawer must prove sufficient funds and a valid reason for the instruction - the accused gave none, admitted his signature, sent no reply to the notice, and admitted there were no written stop-payment instructions; (iii) cross-examination of PW-1 elicited nothing to rebut the S.139 presumption (consistent with Rohitbhai Jivanlal Patel v. State of Gujarat, (2019) 18 SCC 106); (iv) bank extracts Ex.D-2/D-3 showed payments only of 2016, predating the cheque; (v) additional evidence taken at the appellate stage (DW-1, Ex.D-1 to D-5) under S.391 CrPC was insufficient to rebut the presumption; (vi) the order sheet disclosed absence on 63 hearing dates, defeating the plea of non-representation by counsel, and the DW-1 testimony was self-serving; (vii) no ground for revisional interference under Ss.397/401 CrPC. Sentence confirmed: fine Rs.1,10,00,000/- with two years' default imprisonment, of which Rs.1,09,50,000/- as compensation to the complainant and Rs.50,000/- towards prosecution expenses of the State.

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10^TH DAY OF APRIL, 2026

BEFORE

THE HON'BLE MR. JUSTICE V SRISHANANDA CRIMINAL REVISION PETITION No.1800 OF 2025 (397(Cr.PC) / 438(BNSS)

BETWEEN:

MUJEEB A SHARIEFF S/O R SHARIEFF AGED ABOUT 66 YEAR NO.323/1, 8^TH MAIN DOLLARS COLONY, JP NAGAR 4^TH PHASE BENGALURU-560 076

…PETITIONER

(BY SRI RAMDAS D, ADVOCATE)

AND:

Digitally signed by R MANJUNATHA Location: HIGH COURT OF KARNATAKA

AJAY AGARWAL S/O O.P.AGARWAL FLAT NO.C-401, RENNAISSANCE BRINDAVAN UTARAHALLI MAIN ROAD BENGALURU-560 061

(BY SRI DEEPAK B R, ADVOCATE)

…RESPONDENT

THIS CRIMINAL REVISION PETITION IS FILED UNDER SECTION 397 R/W 401 CODE OF CRIMINAL PROCEDURE PRAYING TO SET ASIDE THE IMPUGNED ORDER DATED 23.10.2025, AT ANNEXURE-A PASSED IN CRL.A.NO.244/2023 BY THE LV ADDL. CITY CIVIL AND SESSIONS COURT, BENGALURU, WHEREIN THE ORDER OF THE XVI ACMM, BENGALURU DATED 23.01.2023 IN CC.NO.13363/2018, AT ANNEXURE-B WAS CONFIRMED.

THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE V SRISHANANDA

ORAL ORDER

Heard Sri D.Ramdas, learned counsel for the petitioner and Sri B.R.Deepak, learned counsel for the respondent.

Accused who has suffered an order of conviction for the offence punishable under Section 138 of the Negotiable Instruments Act in C.C No.13363/2018, confirmed in Criminal Appeal No.244/2023 is the revision petitioner.

Facts in the nutshell which are utmost necessary for disposal of the present revision petition are as under:

3.1 A private complaint under Section 200 of the Code of Criminal Procedure came to be lodged with the jurisdictional Magistrate by the respondent/complainant alleging that accused has committed an offence punishable under Section 138 of the Negotiable Instruments Act.

3.2 Complaint averments reveal that accused and his wife are the owners of immovable properties bearing No.75/1 and 76/23 measuring 5 acres 24 guntas situated at Dodderi

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Village, Tavarekere Hobli, Bengaluru South Taluk, in which a residential layout was formed by the accused and his wife.

Complainant had entered into an agreement of sale dated 02.03.2016 in which the accused and his wife agreed to sell 15 sites to the complainant of different dimensions bearing Nos.63, 69, 70, 71, 73, 76, 78, 80, 82, 83, 84, 85, 86, 88 and 89, in all measuring 18,918.55 square feet for a total consideration of ₹1,20,00,000/- of which complainant initially transferred ₹30,00,000/- by way of RTGS to the accused on 02.03.2016.

Thereafter, complainant had issued a cheque for

₹65,00,000/- in the name of wife of the accused drawn on Canara Bank, Lavelle Road, Branch and sum ₹5,00,000/- was paid in cash to the accused and his wife and remaining ₹20,00,000/- was promised to be paid at the time of registration of the sale deed.

Complaint averments further reveal that after receiving

the sale consideration of ₹1,00,00,000/-, the wife of the accused has executed an agreement of sale in favour of the

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complainant in the presence of the accused and promised to complete the sale transaction within eleven months. Complainant waited for more than two years but there was no fulfilment of the promise made by the accused and his wife and there was no sale deed registered.

Thereafter, complainant demanded return of the money of ₹1,00,00,000/- and penalty of ₹1,00,00,000/- for the delay caused.

It is also contended that on persistent demands, accused issued a cheque bearing No.124860 dated 15.01.2018 in a sum of ₹1,00,00,000/- drawn on Bharat Bank Ltd. Jayanagar Branch, Bengaluru.

Complainant presented the said cheque for encashment which came to be dishonored with an endorsement ‘payment stopped’ by the drawer.

Thereafter, a legal notice was issued on 10.04.2018 calling upon the accused to pay the cheque amount of ₹1,00,00,000/within fifteen days and penalty of

₹1,00,00,000/-.

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But despite service of legal notice, there was no compliance to the callings of the notice and therefore, complainant sought for action.

Learned Trial Magistrate after completing necessary formalities, summoned the accused and recorded the plea. Accused pleaded not guilty. Therefore, trial was held.

In order to prove his case, complainant got examined himself as PW-1 and placed on record seven documents which were exhibited and marked as Exhibits P-1 to P-7 viz., original cheque, bank endorsement, copy of the legal notice, postal receipt and postal acknowledgment, track result and agreement of sale.

As against the material evidence placed on record on behalf of the complainant, accused did not chose to place any oral or documentary evidence on record.

Cross-examination in detail of PW-1 also did not yield any positive material so as to disbelieve the case of the complainant or to rebut the presumption available to the complainant under Section 138 of the Negotiable Instruments Act.

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As such, learned Trial Magistrate convicted the accused for the offence punishable under Section 138 of the Negotiable Instruments Act and ordered to pay Rs.1,10,00,000/- as the fine amount with default sentence of two years imprisonment. Out of the fine amount, Rs.1,09,50,000/- was ordered to be paid as compensation to the complainant and balance sum of Rs.50,000/- towards the defraying expense of the State.

Being aggrieved by the said judgment passed by the learned Trial Magistrate, accused filed an appeal before the Court in Criminal Appeal No.244/2023.

Learned Judge in the First Appellate Court after securing the records heard the arguments of the parties in detail and by considered judgment dated 23.10.2025 dismissed the appeal of the accused.

Being further aggrieved by the same, accused is before this Court in this revision on the following grounds:

“The Impugned Order is opposed to Law, Facts, and Evidence on Record. The learned Sessions Judge has failed to appreciate that the conviction recorded by the trial court was a result of nonrepresentation of the Petitioner by his counsel on

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material dates. The appellate court ought to have remanded the matter for fresh consideration rather than itself conducting cross-examination and recording defence evidence.

The trial court proceeded to make the order due to the absence of the defence counsel on material dates. The complainant was not cross examined by the defence counsel..

The prayer of the petitioner before the appellate court was specific and the first appellate court erred in recording entire Evidence at the Appellate Stage. The first appellate court exceeded in exercising the power under section 391 of crpc.

The appellate court gravely erred in assuming the role of the trial court by recording entire evidence. Such a procedure is impermissible and contrary to the settled position of law that an appellate court should either reconsider evidence already adduced or order remand, but cannot convert itself into a court of original jurisdiction except within the limited scope of Section 391 Cr.P.C. for additional evidence only.

Non-appreciation of Material facts

The appellate court ignored the admitted fact that the Respondent has already received Rs.83,00,000/-, which materially alters the complexion of the alleged liability. The complainant's version that the cheque was issued as a "penalty" is inherently improbable and against

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the very object of Section 138 of the N.I. Act, which relates only to legally enforceable debt or liability.

Absence of Legally Enforceable Debt

Once the Respondent admittedly received a substantial portion of the amount, the question of issuing a cheque for Rs.1,00, and 00,000/- as penalty does not arise. The alleged cheque was not issued for discharge of any existing liability and does not constitute a legally enforceable debt within the meaning of Explanation to Section 138 of the N.I. Act.

The appellate court failed to consider the inherent contradictions surrounding the issuance of the disputed cheque. The Respondent's interest in the entity M/s. G M Handicrafts clearly demonstrates that the Respondent was aware of the encumbrances on the property and cannot attribute default to the vendor under the agreement of sale.

The impugned order results in a gross miscarriage of justice, as the Petitioner has been convicted without full and fair adjudication. The appellate court has mechanically confirmed the conviction without proper evaluation of the evidence.

The court below has erred to note that the agreement of sale dated 2-3-2016 does not provide for penalty for non-performance of the agreement. The respondent has admitted there is

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no written agreement between the parties for payment of penalty.

The present case falls squarely within the ambit of revisional interference, as the impugned order suffers from legal infirmities, procedural impropriety, and perversity warranting interference under Sections 397 & 401 Cr.P.C.”

Sri Ramdas, learned counsel for the revision petitioner reiterating the grounds urged in the revision petition would contend that there is a defect in the legal notice issued by the complainant calling upon the accused to pay the money inasmuch as, in the notice, sum of Rs.2,00,00,000/- is demanded as against the cheque amount of Rs.1,00,00,000/-. Therefore, the very initiation of the criminal proceedings itself is incorrect as it is not in compliance with Section 138(b) of the Negotiable Instruments Act and thus, sought for allowing the revision petition.

He would further contend that there were several payments made by the accused to the tune of Rs.91,10,000/and the same has not been accounted and cheque got to be filled up in a sum of Rs.1,00,00,000/-. Therefore, there was no

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liability covered under the cheque and thus sought for allowing the revision petition.

He would further contend that in every case there is no need for the accused to lead defence evidence, if by crossexamining the prosecution witness itself, the presumption available to the complainant can be rebutted as is held by the Hon'ble Apex Court in the case of Rohitbhai Jivanlal Patel

vs. State of Gujarat and another reported in (2019)18 SCC

106 .

Sri Ramdas, would also contend that, the answers elicited in the cross- examination is sufficient enough to rebut the presumption available to the complainant under Section 139 of the Negotiable Instruments Act which has been ignored by both the Courts resulting in miscarriage of justice and thus sought for allowing the revision petition.

Per contra, Sri Deepak, learned counsel for the respondent/complainant supports the impugned judgments.

He would further contend that the payments made by the accused earlier to the passing of the cheque has been taken

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note of and it has got nothing to do in respect of the dishonored cheque marked vide Exhibit P-1.

According to him, those transactions referred to by learned counsel for petitioner are different transactions and to establish that the amounts paid on several dates to the tune of Rs.91,10,000/- as is placed before this Court for the first time is for the different transactions and the same is not placed before the Trial Magistrate nor the same was confronted to PW1 before the Trial Court. Therefore, the said defence cannot be countenanced in law, that too, for the first time before the Revisional Court and thus, sought for dismissal of the revision petition.

He would further contend that the demand of

Rs.1,00,00,000/- as penalty has got nothing to do in appreciating the notice issued on behalf of the complainant under Section 138(b) of the Negotiable Instruments Act and therefore, same would not vitiate the trial and the conviction order and sought for dismissal of the revision petition.

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Having heard the arguments of both sides, this Court perused the material on record meticulously.

On such perusal of the material on record, it is crystal clear that there is no dispute that Exhibit P-1 is the cheque belonging to the accused. The signature found therein is that of the accused. The cheque is dishonoured with an endorsement ‘payment stopped by the drawer’.

It is settled principles of law and requires no emphasis that, if the cheque is dishonoured with an endorsement ‘payment stopped by the drawer’, it is necessary on the part of the accused to place before the Court material evidence to the effect that sufficient balance was kept in the account of the accused and ‘stop payment’ instructions is for the valid reason.

In the case on hand, on what ground the accused has instructed for ‘stop payment’ is not forthcoming on record. While recording the accused's statement for question No.10 of the statement recorded under Section 313 of the code of Criminal Procedure, accused has specifically stated that he has got evidence to lead.

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But for the reasons best known to the accused, he has

not chosen to place any material evidence on record.

The trial has commenced in the year 2018. P.W.1 was cross-examined at length on 13.11.2019 and on 14.12.2022. Before conducting such cross-examination, no application under Section 142 of the Negotiable Instruments Act was filed on behalf of the accused. This is in utter violation of the directions issued by the Hon'ble Apex Court in the case of Indian Bank

Association and others vs. Union of India and others

reported in (2014)5 SCC 590 . There is no plea of defence either placed before the Court by the accused.

Further, there cannot be any dispute with regard to the principles of law enunciated by the Hon'ble Apex Court in the case of Rohitbhai supra.

In the case on hand, in the cross-examination of P.W.1,

no valid answers are elicited so as to rebut the presumption available to the complainant under Section 139 of the Negotiable Instruments Act.

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As per the directions issued in the case of Indian Bank Association supra , the trial should have commenced from the leading of defence evidence. But the accused has failed to lead any defence evidence though he has specifically answered for question No.10 while recording the accused's statement that he would lead the defence evidence. Why the accused failed to lead any defence evidence or mark any documentary evidence on record is a question that remains unanswered.

There is a valid reason to oppose the submissions made on behalf of the revision petitioner that there was discharge of the amount of Rs.91,10,000/- on different dates as per the memo and photocopy of the bank statement, extract of the bank statement that is placed on record, on behalf of the accused.

Assuming that there is repayment, it should have been at least spelt out while cross-examining PW-1. The suggestions made to PW-1 before the Trial Magistrate and with permission before the First Appellate Court with regard to the payments which are made earlier to the date of cheque which is also

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found from Exhibits D-2 and D-3 which are the bank extracts

have been placed before the Court along with the memo.

As could be seen from the extract which is found in Exhibits D-2 and D-3, the payments that is made to the complainant are all of the year 2016 whereas the cheque in question in the case on hand marked at Exhibit P-1 is dated 15.01.2018.

Admittedly, accused has accepted that Ex.P-1 is his cheque and signature found therein is that of the accused.

Pertinently, there is no reply to the notice issued by the

accused before initiating the proceedings.

Assuming that there is a mistake with regard to the demand made inasmuch as a penalty of Rs.1,00,00,000/- is also sought for along with the cheque amount in the legal notice, same would not vitiate the criminal proceedings inasmuch as, if Rs.1,00,00,000/- was due by the accused, that could have been paid.

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Purpose of issuance of notice under Section 138 of the Negotiable Instruments Act is to provide an opportunity of fifteen days for the honest and bonafide drawer to make good the amount covered under the cheque.

Further before the First Appellate Court accused got examined as DW-1. In his cross-examination accused having accepted Exhibit P-1, stated that the writings in Exhibit P-1 are not in his handwriting. He also admits that there is no written instructions to the banker for ‘stop payment’.

He further admits that there was no intimation in writing to the complainant about the ‘stop payment’. He has specifically answered that complainant along with 40 to 50 persons armed with deadly weapons came to his house after jumping the compound and forcibly extracted the signed cheque.

Pertinently, no criminal action has been taken against the complainant in this regard. Accused has stated that he approached the police, but police have stated that it is a matter of civil nature.

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Nothing prevented the accused to lodge a private complaint before the very same Magistrate, if the police did not take any action about the forcible snatching of the cheque.

Accused admits that the address mentioned in the acknowledgment namely No.92, 6^th Cross, Dollars’ Colony, BTM-II Stage, Bengaluru-76 is his address and his daughter's name is Sara. He has conveniently given evasive answer as to non-issue of the reply. He also stated that he has informed the complainant that he has paid Rs.83,26,000/- and therefore he is not liable to pay any amount, orally.

Thus, from the material evidence placed before the Trial Magistrate and on permission placed before the First Appellate Court as additional evidence in cross-examining PW-1 and examining the accused as DW-1 and placing Exhibit D-1 to D-5 is not sufficient to rebut the presumption available to the complainant under Section 139 of the Negotiable Instruments Act is the finding recorded by the learned Judge in the First Appellate Court.

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Even after considering the additional evidence that was permitted to be placed before the First Appellate Court, owing to the fact that there was an allegation that the counsel for accused has not taken active interest in conducting the litigation, order sheet discloses that on 63 hearing dates, accused has remained absent which he denies in the crossexamination, which is up against the records of the Court.

Therefore, no value can be attached to accused’s testimony which is nothing but self serving testimony.

Taking note of these aspects of the matter, having regard to the limited revisional jurisdiction this Court does not find any ground whatsoever, much less, good grounds to interfere with the well reasoned orders passed by both the Courts.

53. Accordingly, the following:

ORDER

Revision petition is meritless and is hereby dismissed .

SD/(V SRISHANANDA) JUDGE

kcm List No.: 2 Sl No.: 45

Issues for consideration

4 issues framed by the court

AI extract

1.
Whether the legal notice demanding Rs.2,00,00,000/- (cheque amount plus penalty) as against the cheque amount of Rs.1,00,00,000/- is defective and vitiates the proceedings for non-compliance with Section 138(b) NI Act.¶20
The court held
Assuming a mistake in the notice insofar as a penalty of Rs.1,00,00,000/- was additionally sought along with the cheque amount, such over-demand does not vitiate the criminal proceedings, since if the cheque amount was due the accused could have paid it.ratio¶42
2.
Whether the First Appellate Court exceeded its power under Section 391 CrPC by recording additional evidence instead of remanding the matter.medium confidence¶68
The court held
Even after considering the additional evidence permitted before the First Appellate Court (cross-examination of PW-1, examination of accused as DW-1 and Exhibits D-1 to D-5), the material was not sufficient to rebut the presumption under Section 139 NI Act.ratio¶49
3.
Whether the alleged earlier payments (Rs.91,10,000/- claimed; about Rs.83 lakhs admitted) establish absence of legally enforceable debt and rebut the presumption under Section 139 NI Act.¶86
The court held
Where a cheque is dishonoured with endorsement 'payment stopped by the drawer', it is necessary for the accused to place material evidence that sufficient balance was kept and that the stop-payment instruction was for a valid reason; on the record, no ground for the stop-payment instruction is forthcoming.ratio¶30
4.
Whether the conviction was a result of non-representation by the defence counsel on material dates, warranting revisional interference or remand.medium confidence¶61
The court held
As per the directions in Indian Bank Association, the trial should have commenced from the leading of defence evidence; but the accused, though he specifically answered question No.10 in his Section 313 statement that he would lead defence evidence, failed to lead any defence evidence.ratio¶36