Gujarat High Court
Lalji Meghji Hirani (Halai) vs State Of Gujarat on 17 January, 2025
NEUTRAL CITATION
R/CR.MA/23925/2024 ORDER DATED: 17/01/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 23925 of 2024
(FOR LEAVE TO APPEAL)
In
F/CRIMINAL APPEAL NO. 30428 of 2024
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LALJI MEGHJI HIRANI (HALAI)
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR HARSHIT S BHATT(12874) for the Applicant(s) No. 1
MR BHARGAV PANDYA, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MS. JUSTICE S.V. PINTO
Date : 17/01/2025
ORAL ORDER
1. The present application is filed by the applicant – original
complainant under Section 378(4) of the Code of Criminal
Procedure, 1973 (for short “Cr.P.C.”) seeking leave to file an
appeal against the judgment and order dated 08.04.2023
passed by the learned Chief Judicial Magistrate, Bhuj at
Kachchh in Criminal Case No. 10336 of 2021, whereby the
respondent No 2 original accused came to be acquitted from
the charge levelled against him under Section 138 of the
Negotiable Instruments Act, 1881 (hereinafter referred to as
‘the Act”).
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1.1 The respondent No 2 is hereinafter referred to as “the
accused” as he stood in the original case for the sake of
convenience, clarity and brevity.
2. The brief facts culled out from the memo of the present
application as well as the impugned judgment and order and
paper book filed by the applicant are as under:
2.1 The applicant had filed a complaint against the accused
under Section 138 of the Act, as the accused had taken a loan
of Rs. 13,00,000/- for business purpose and the accused had
given five Cheques bearing nos. 499576 for Rs. 5,00,000/-,
499577 for Rs. 5,00,000/-, 499578 for Rs. 1,00,000/-, 499579
for Rs. 1,00,000/- and 676876 for Rs. 1,00,000/- all dated
13.07.2021 in favor of the applicant. The applicant deposited
the said cheques in his bank and they were dishonored and
the reason mentioned in the return memo dated 14.07.2021 of
all cheques was “Funds Insufficient”. The applicant sent the
demand notice to the accused on 11.08.2021 against which no
reply was given and no payment was made though it was
served. The applicant filed the criminal complaint before the
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learned Chief Judicial Magistrate, Bhuj at Kachchh under
Section 138 of the Negotiable Instruments Act, 1881 which
was registered as Criminal Case no. 10336 of 2021.
2.2 The accused was served with the summons and appeared
before the learned Trial Court and plea of the accused was
recorded at Exh.16. The complainant himself stepped into
the witness box and was examined at Exh.6 and the
complainant produced 16 documentary evidence in support
of the case. After the closing pursis of the complainant was
filed at Exh.39, the further statement of the accused was
recorded, wherein, the accused has stepped into the witness
box and has deposed at Exh.45 and has produced 2
documents in support of his case. That accused has mainly
stated that the cheques were given as per the agreement
merely for security and the complainant has himself filled up
the cheques and has presented them before the bank. After
the closing pursis of the accused was filed at Exh.50, the
learned Trial Court heard the arguments of the learned
advocate for the parties and by the impugned judgment and
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order, was pleased to acquit the accused from the offence
punishable under Section 138 of Act.
3. Being aggrieved and dissatisfied with the impugned
judgment and order, the applicant has preferred the present
application seeking leave to appeal mainly stating that the
learned Trial Court has committed a serious error of law in
acquitting the accused and the presumption under Section
139 of the Negotiable Instrument Act has not been raised in
favour of the applicant. That the accused has not led
sufficient evidence to rebut the presumption and the
applicant has successfully proved that the accused had taken
an amount of Rs.13,00,000/- and the cheques in question
were given towards payment of the same. The agreement is
also produced on record, which clearly establishes that a
legally enforceable debt exists and the cheques were
deposited in the Central Bank of India, Bhuj Branch, which
were returned with endorsement “funds insufficient” on the
return memo. The applicant was also served with the
statutory notice to the accused but, no reply was given to
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the same and as the accused has successfully proved his
case, the leave to appeal must be allowed.
4. Heard learned advocate Mr.H.S.Bhatt for the applicant –
original complainant and learned APP Mr.Bhargav Pandya
for the respondent – State.
5. Learned advocate Mr.H.S.Bhatt for the applicant has taken
this Court through the evidence produced by the applicant
on record before the learned Trial Court and has submitted
that the applicant has proved the case beyond reasonable
doubts. That even though, the accused has examined one
witness, the presumption has not been raised by the learned
Trial Court in favour of the complainant, and hence, leave to
appeal must be allowed.
6. Learned APP Mr.Bhargav Pandya for the respondent – State
has submitted that the learned Trial Court has appreciated
all the evidence in true perspective and has not committed
any error in acquitting the accused. Therefore, no
interference of this Court is required in the impugned
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judgment and the order of acquittal passed by the learned
Trial Court and has urged this Court to reject the application
for leave to appeal.
7. Since this is an application seeking leave to appeal against an
order of acquittal, at this juncture, it would be fit to refer the
settled principles of laws in cases filed under the NA Act.
7.1 With regard to the facts in the present case, it would be fit to
refer to the observations made the Apex Court in Rangappa
vs Sri Mohan reported in 2010 11 SCC 441 in para 14 as
under.
“14. In light of these extracts, we are in agreement with the
respondent-claimant that the presumption mandated
by Section 139 of the Act does indeed include the
existence of a legally enforceable debt or liability. To
that extent, the impugned observations in Krishna
Janardhan Bhat (supra) may not be correct. However,
this does not in any way cast doubt on the correctness
of the decision in that case since it was based on the
specific facts and circumstances therein. As noted in
the citations, this is of course in the nature of a
rebuttable presumption and it is open to the accused
to raise a defence wherein the existence of a legally
enforceable debt or liability can be contested.
However, there can be no doubt that there is an initial
presumption which favours the complainant. Section
139 of the Act is an example of a reverse onus clause
that has been included in furtherance of the
legislative objective of improving the credibility ofPage 6 of 15
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negotiable instruments. While Section 138 of the Act
specifies a strong criminal remedy in relation to the
dishonour of cheques, the rebuttable presumption
under Section 139 is a device to prevent undue delay
in the course of litigation. However, it must be
remembered that the offence made punishable by
Section 138 can be better described as a regulatory
offence since the bouncing of a cheque is largely in
the nature of a civil wrong whose impact is usually
confined to the private parties involved in
commercial transactions. In such a scenario, the test
of proportionality should guide the construction and
interpretation of reverse onus clauses and the
accused/defendant cannot be expected to discharge
an unduly high standard of proof. In the absence of
compelling justifications, reverse onus clauses
usually impose an evidentiary burden and not a
persuasive burden. Keeping this in view, it is a settled
position that when an accused has to rebut the
presumption under Section 139, the standard of proof
for doing so is that of ‘preponderance of probabilities.
Therefore, if the accused is able to raise a probable
defence which creates doubts about the existence of a
legally enforceable debt or liability, the prosecution
can fail. As clarified in the citations, the accused can
rely on the materials submitted by the complainant in
order to raise such a defence and it is conceivable that
in some cases the accused may not need to adduce
evidence of his/her own.”
7.1 The Apex Court in the case of Tedhi Singh vs Narayan Dass
Mahant reported in 2022 6 SCC 735 has observed as under in
Para 7 as under:
“7. It is true that this is a case under Section 138 of the
Negotiable Instruments Act. Section 139 of the N.I.
Act provides that Court shall presume that the
holder of a cheque received the cheque of the naturePage 7 of 15
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referred to in Section 138 for the discharge, in whole
or in part, of any debt or other liability. This
presumption, however, is expressly made subject to
the position being proved to the contrary. In other
words, it is open to the accused to establish that there
is no consideration received. It is in the context of
this provision that the theory of ‘probable defence’
has grown. In an earlier judgment, in fact, which has
also been adverted to in Basalingappa (supra), this
Court notes that Section 139 of the N.I. Act is an
example of reverse onus [see (2010) 11 SCC 441). It is
also true that this Court has found that the accused is
not expected to discharge an unduly high standard
of proof. It is accordingly that the principle has
developed that all which the accused needs to
establish is a probable defence. As to whether a
probable defence has been established is a matter to
be decided on the facts of each case on the
conspectus of evidence and circumstances that exist.”
7.2 The Apex Court in the case of Dashrathbhai Trikambhai
Patel Vs Hitesh Mahendrabhai Patel & Anr. reported in
(2023) 1 SCC 578 has observed as under:
“30. In view of the discussion above, we summarise our findings
below:
(i) For the commission of an offence under Section 138, the
cheque that is dishonoured must represent a legally
enforceable debt on the date of maturity or presentation;
(ii) If the drawer of the cheque pays a part or whole of the sum
between the period when the cheque is drawn and when it
is encashed upon maturity, then the legally enforceable
debt on the date of maturity would not be the sum
represented on the cheque;
(iii) When a part or whole of the sum represented on the
cheque is paid by the drawer of the cheque, it must bePage 8 of 15
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endorsed on the cheque as prescribed in Section 56 of the
Act. The cheque endorsed with the payment made may be
used to negotiate the balance, if any. If the cheque that is
endorsed is dishonoured when it is sought to be encashed
upon maturity, then the offence under Section 138 will
stand attracted;
(iv) The first respondent has made part-payments after the debt
was incurred and before the cheque was encashed upon
maturity. The sum of rupees twenty lakhs represented on
the cheque was not the ‘legally enforceable debt’ on the
date of maturity. Thus, the first respondent cannot be
deemed to have committed an offence under Section 138 of
the Act when the cheque was dishonoured for insufficient
funds; and
(v) The notice demanding the payment of the ‘said amount of
money’ has been interpreted by judgments of this Court to
mean the cheque amount. The conditions stipulated in the
provisos to Section 138 need to be fulfilled in addition to
the ingredients in the substantive part of Section 138. Since
in this case, the first respondent has not committed an
offence under Section 138, the validity of the form of the
notice need not be decided.”
8. In light of the above settled principles of law in the cases
filed under the Negotiable Instrument Act and perusing the
evidence led by the complainant before the learned Trial
Court, it is the case of the complainant that the accused had
taken an amount of Rs.13,00,000/- from him towards which
the cheques in question were issued and the examination in
chief of the complainant has been produced at Exh.6 mainly
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narrating the facts of the complainant. During the cross-
examination by the learned advocate for the accused, the
complainant has stated that the accused had filed a
defamation case against him before the Mankuva Police
Station on 10.07.2021 and the financial transaction between
the accused and the Govindbhai had begun in the year 2015
and the interest was paid till 2017. The accused had paid an
amount of Rs.9,00,000/- as interest from 2018 to 2021, but he
has not mentioned the said facts in the complaint, the notice
or in his examination-in-chief. The agreement is produced at
Exh.36 but the agreement does not state when the amount
would have to be paid. As per the agreement, interest at the
rate of 15% was to be charged on the amount and the
complainant had admitted that the cheques in question were
given as a security. That the writings on the cheques were in
a pen with blue ink and the amount was written with a in
black pen and both were written by different pens. The
complainant has admitted that he does not have any license
to advance money interest and the accused did not instruct
him to deposit the cheques, which were given as security.
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The complainant has also admitted that he has not
mentioned the date, place, time and the amount of currency
notes, by which, the amount of Rs.13,00,000/- were given to
the accused. The learned Trial Court has considered the fact
that the complainant in the complaint has stated that the
amount of Rs.13,00,000/- was given but the exact time and
date when the amount was given is not mentioned. In the
agreement dated 29.03.2019, it is mentioned that the cheques
in question were given and the complainant mentions that
the cheques were given on 13.07.2021, and it is not proved
that the cheques were given on 13.07.2021 and signed by the
accused on 13.07.2021. Moreover, the learned Trial Court has
also considered that the stamp on which the agreement is
written was purchased on 22.02.2017 and the agreement was
executed on 29.03.2019 after about 2 years and there was no
clarity that the cheques were given on 13.07.2021, the date on
which the cheques were presented in the back. Moreover, the
learned Trial Court has also observed that the complainant
has not mentioned that the amount of Rs.22,00,000/- was
advanced in the complaint whereas the agreement states that
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Rs.22,00,000/- were advanced and the cheques in question
were given towards the same, and hence, the legally
enforceable debt is not proved. The learned Trial Court has
considered that when the cheques were given as security,
they could be used only when the legal amount was due and
prior to depositing the cheques, no notice was given to the
accused by the complainant and the accused did not instruct
the complainant to deposit the cheques in the bank and that
the accused has successfully rebutted the presumption as per
the judgment of the Apex Court in the case of Basalingappa
Vs. Mudibasappa passed in Criminal Appeal No. 636 of
2019.
8.1 On appreciation of the evidence in light of the judgement of
the Apex Court in the case of Rangappa(supra) the accused
has rebutted the evidence of the complainant up to the extent
of preponderance of probabilities and has raised a probable
defence, and there is a doubt about the existence of a legally
enforceable debt or liability. As the complainant is himself,
not clear regarding the date and time when the amount was
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advanced and the exact amount that was advanced, it
appears that the complainant has not brought out the true
facts regarding the transaction with the accused on record. It
is admitted by the complainant that the cheques were only
given as security and they were not deposited as per the
instructions of the accused. Moreover, as per the agreement
that is executed by the complainant with the accused, Harish
Govindbhai Halai and Govind Kesar Halai on behalf of
Sahar Furniture, it is mentioned that an amount of
Rs.22,00,000/- were taken and the agreement is signed by all
three persons. It is not clarified by the complainant as to
how out of the amount of Rs.22,00,000/-. The complaint
states that only an amount of Rs.13,00,000/- is due and the
complaint is silent about the agreement or Rs.22,00,000/-.
That if the accused had repaid up some amount as per the
judgment of the Apex Court in Dashrathbhai Trikambhai
Patel (supra), the sum mentioned on the cheque was not the
legally enforceable death, and the accused cannot be deemed
to have committed an offence under section 138 of the N I
Act.
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9. In light of the settled principles of law, the learned Trial
Court has rightly concluded that the complainant has failed
to prove the legally enforceable debt and has considered the
inconsistency in the complaint, the agreement and the
examination-in-chief of the complainant and has found that
the evidence of the complainant was unreliable and the
accused had successfully rebutted the presumption and the
debt was not legally enforceable, which is the essential
requirement in such cases. The complainant has not proved
the legal debt beyond reasonable doubt and as there was no
legally enforceable debt, the learned Trial court has passed
the impugned judgment and order of acquittal, which is just
and proper and does not require any interference of this
Court.
10. Consequently, the present application seeking leave to
present an appeal under section 378(4) of the Code of
Criminal Procedure fails and is hereby dismissed.
11. Notice stands discharged. Record and proceedings if any, be
sent back to the trial court forthwith.
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12. Since the leave to prefer appeal is rejected, no order is
required to be passed in the Criminal Appeal, which is at
filing stage and the same stands disposed accordingly.
(S. V. PINTO,J)
*F.S.KAZI…..
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