Gujarat High Court
Mas Financial Services Ltd Thro 039 … vs State Of Gujarat on 11 March, 2025
NEUTRAL CITATION
R/CR.A/87/2017 JUDGMENT DATED: 11/03/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL APPEAL (AGAINST ACQUITTAL) NO. 87 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE S.V. PINTO Sd/-
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Approved for Reporting Yes No
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MAS FINANCIAL SERVICES LTD THRO 039 PANDAV MANISHKUMAR
SHANKARBAH
Versus
STATE OF GUJARAT & ANR.
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Appearance:
TIRTH NAYAK(8563) for the Appellant(s) No. 1
RULE SERVED for the Respondent(s) No. 2
MR BHARGAV PANDYA, APP for Respondent No.1
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CORAM:HONOURABLE MS. JUSTICE S.V. PINTO
Date : 11/03/2025
ORAL JUDGMENT
1. The present appeal is filed by the appellant – original
complainant under Section 378(4) of the Code of Criminal
Procedure, 1973 against the judgment and order of acquittal dated
16.09.2016 passed by the learned 4th Additional Chief Judicial
Magistrate, Palanpur in Criminal Case No. 8578 of 2013, whereby
the respondent No. 2 – original accused came to be acquitted from
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the offence under Section 138 of the Negotiable Instruments Act,
1881 (hereinafter referred to as ‘the NI Act“).
1.1 The parties are hereinafter referred to as “the
complainant” and “the accused” as they 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
appeal as well as the impugned judgment and order and paper
book filed by the complainant are as under:
2.1 The complainant filed a complaint against the accused
under Section 138 of the N.I.Act as the accused had taken a loan by
executing agreement No.175027 and an amount of Rs.20,000/-
was taken as loan. As per the agreement, the accused had to pay
regular installments, but the same were not paid and the accused
cancelled the loan and gave cheque No.067473 dated 18.03.2013 for
Rs. 54,816/- of his account with The Banaskantha Mercantile Co.
Op. Bank, Deesa Branch. The cheque was deposited in the bank of
the complainant for clearing, but the same returned unpaid on
20.03.2013 with the endorsement “Funds Insufficient”. The
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complainant gave the statutory demand notice through his
advocate on 18.04.2013 which was duly served and the accused
did not repay the amount, and hence, the complainant filed the
complaint under Section 138 of the Act before the Court of the
Chief Judicial Magistrate, Palanpur.
2.2 The accused was duly served with the summons and
appeared before the learned Trial Court and his plea was recorded
at Exhibit 04 and the evidence of the complainant was taken on
record. The complainant was examined on oath and 07
documentary evidences were produced in support of his case.
2.3 After the closing pursis was filed by the complainant at
Exhibit 35, the further statement of the accused under Section 313
of the Code of Criminal Procedure was recorded, wherein the
accused stated that the facts in examination in chief and in the
complaint are false and a false complaint has been filed. The
accused refused to step into the witness box or lead evidence and
after the arguments of the learned advocates for both the parties
were heard, by the impugned judgment and order, the learned
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Trial Court acquitted the accused from the offence under Section
138 of the Act.
3. Being aggrieved and dissatisfied with the same, the
complainant has preferred the present application seeking leave to
appeal mainly stating that the learned Trial Court has not properly
interpreted the evidence and has misread the evidence and the
impugned judgment and order is perverse, erroneous and
contrary to law.
4. Heard learned Advocate Mr. Neel Vasant for learned
advocate Mr. Tirth Nayak appearing for the appellant and learned
APP Mr. Bhargav Pandya for the respondent – State. Though
served, the respondent No.2 has not appeared either in person or
through an advocate. Perused the impugned judgment and order
of acquittal and have re-appreciated the entire evidence of the
prosecution on record of the case.
5. Learned Advocate Mr. Neel Vasant for learned
advocate Mr. Tirth Nayak appearing for the appellant has taken
this Court through the entire evidence produced by the
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prosecution and has vehemently argued that the learned Trial
Court has not appreciated the evidence properly and the
complainant has produced cogent evidence to prove the case and
has successfully proved the case against the accused but the
learned Trial Court has not considered the same and has acquitted
the accused. The judgment and order of acquittal passed by the
learned Trial Court is contrary to law, evidence on record and
principles of justice. The judgment and order of acquittal passed
by the learned Trial Court is based on inferences, not warranted by
facts of the case and also on presumption, not permitted by law.
Learned Advocate has urged this Court to quash and set aside the
impugned judgment and order of acquittal and find the accused
guilty for the said offence. Learned Advocate has urged this Court
to allow the present appeal and impose proper sentence on the
accused.
6. Learned APP Mr. Bhargav Pandya for the respondent
No. 1 – 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
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interference of this Court is required in the impugned judgement
and the order of acquittal passed by the learned Trial Court and
have urged this Court to reject the appeal.
7. At the outset, before discussing the facts of the present
case, it would be appropriate to refer to the observations of the
Apex Court regarding scope of interference in acquittal appeals in
the case of Constable 907 Surendra Singh & Anr. Vs State of
Uttarakhand reported in 2025 0 INSC 114 the Apex Court has
observed in Para 11 and 12 as under:
“11. Recently, in the case of Babu Sahebagouda Rudragoudar and
others v. State of Karnataka, (2024) 8 SCC 149 a Bench of this
Court to which one of us was a Member (B.R. Gavai, J.) had an
occasion to consider the legal position with regard to the scope
of interference in an appeal against acquittal. It was observed
thus:
38. First of all, we would like to reiterate the principles laid
down by this Court governing the scope of interference
by the High Court in an appeal filed by the State for
challenging acquittal of the accused recorded by the trial
court.
39. This Court in Rajesh Prasad v. State of Bihar [Rajesh
Prasad v. State of Bihar, (2022) 3 SCC 471 : (2022) 2 SCC
(Cri) 31] encapsulated the legal position covering the field
after considering various earlier judgments and held as
below : (SCC pp. 482-83, para 29)
“29. After referring to a catena of judgments, this Court
culled out the following general principles
regarding the powers of the appellate court while
dealing with an appeal against an order ofPage 6 of 17
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acquittal in the following words : (Chandrappa
case [Chandrappa v. State of Karnataka, (2007) 4
SCC 415 : (2007) 2 SCC (Cri) 325] , SCC p. 432, para
42)
42. From the above decisions, in our considered view,
the following general principles regarding powers
of the appellate court while dealing with an appeal
against an order of acquittal emerge:
(1) An appellate court has full power to review,
reappreciate and reconsider the evidence
upon which the order of acquittal is
founded.
(2) The Criminal Procedure Code, 1973 puts no
limitation, restriction or condition on
exercise of such power and an appellate
court on the evidence before it may reach its
own conclusion, both on questions of fact
and of law.
(3) Various expressions, such as, “substantial
and compelling reasons”, “good and
sufficient grounds”, “very strong
circumstances”, “distorted conclusions”,
“glaring mistakes”, etc. are not intended to
curtail extensive powers of an appellate
court in an appeal against acquittal. Such
phraseologies are more in the nature of
“flourishes of language” to emphasise the
reluctance of an appellate court to interfere
with acquittal than to curtail the power of
the court to review the evidence and to
come to its own conclusion.
(4) An appellate court, however, must bear in
mind that in case of acquittal, there is
double presumption in favour of the
accused. Firstly, the presumption of
innocence is available to him under the
fundamental principle of criminal
jurisprudence that every person shall be
presumed to be innocent unless he is
proved guilty by a competent court of law.
Secondly, the accused having secured his
acquittal, the presumption of his innocence
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is further reinforced, reaffirmed and
strengthened by the trial court.
(5) If two reasonable conclusions are possible
on the basis of the evidence on record, the
appellate court should not disturb the
finding of acquittal recorded by the trial
court.’ ”
40. Further, in H.D. Sundara v. State of Karnataka [H.D.
Sundara v. State of Karnataka, (2023) 9 SCC 581: (2023) 3
SCC (Cri) 748] this Court summarised the principles
governing the exercise of appellate jurisdiction while
dealing with Page No. 6 of 9 an appeal against acquittal
under Section 378 CrPC as follows : (SCC p. 584, para 8)
8. XXX XXX XXX
8.1. The acquittal of the accused further strengthens
the presumption of innocence;
8.2. The appellate court, while hearing an appeal against
acquittal, is entitled to reappreciate the oral and
documentary evidence;
8.3. The appellate court, while deciding an appeal against
acquittal, after reappreciating the evidence, is
required to consider whether the view taken by
the trial court is a possible view which could have
been taken on the basis of the evidence on record;
8.4. If the view taken is a possible view, the appellate
court cannot overturn the order of acquittal on the
ground that another view was also possible; and
8.5. The appellate court can interfere with the order of
acquittal only if it comes to a finding that the only
conclusion which can be recorded on the basis of
the evidence on record was that the guilt of the
accused was proved beyond a reasonable doubt
and no other conclusion was possible.”
41. Thus, it is beyond the pale of doubt that the scope of
interference by an appellate court for reversing the
judgment of acquittal recorded by the trial court in
favour of the accused has to be exercised within the four
corners of the following principles:
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41.1. That the judgment of acquittal suffers from patent
perversity;
41.2. That the same is based on a misreading/omission to
consider material evidence on record; and
41.3. That no two reasonable views are possible and only
the view consistent with the guilt of the accused is
possible from the evidence available on record.”
12. It could thus be seen that it is a settled legal position that the
interference with the finding of acquittal recorded by the
learned trial judge would be warranted by the High Court only
if the judgment of acquittal suffers from patent perversity; that
the same is based on a misreading/omission to consider
material evidence on record; and that no two reasonable views
are possible and only the view consistent with the guilt of the
accused is possible from the evidence available on record.”
8. In light of the above it is a settled principle of law that
in an appeal against acquittal, the Appellate Court is
circumscribed by limitation that no interference has to be made in
the order of acquittal unless after appreciation of the evidence
produced before the learned Trial Court, it appears that there are
some manifest illegality or perversity which could not have been
possibly arrived at by the Court. It is also a settled principle that
there is no embargo on the Appellate Court to review the evidence
but, generally the order of acquittal shall not be interfered with as
the presumption of innocence of the accused is further
strengthened by the order of acquittal. The golden thread which
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runs through the web of administration of justice in criminal cases
is that if two views are possible on the evidence adduced in the
case of the prosecution i.e. (i) guilt of the accused and (ii) his
innocence, the view, which is in favour of the accused, should be
adopted, and if the trial Court has taken the view in favour of the
accused, the Appellate Court should not disturb the findings of the
acquittal. The Appellate Court can interfere with the judgment and
order of acquittal only when there are compelling and substantial
reasons and the order is clearly unreasonable and where the
Appellate Court comes to conclusion that based on the evidence,
conviction is a must.
9. In light of the above settled principles of law in
acquittal appeals the evidence of the complainant on record is
appreciated and the examination in chief of the complainant is
produced at exhibit 28 wherein the complainant has stated that a
loan of ₹20,000/- was taken by the accused and the statement of20,000/- was taken by the accused and the statement of
loan account is produced at exhibit 34 but the statement does not
bear any sign or seal of the company and seems a simple print
copy. Moreover, the loan agreement produced at exhibit 26 does
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not show the rate of interest at which the loan was taken and does
not show the rate of penal interest which was to be taken from the
accused if the instalments were not paid in time by the accused.
The calculations of the amounts of late interest, penal interest
service charge, miscellaneous dealer debit etc. shown in the
statement of loan account have not been clarified by the
complainant, and the complainant did not have any personal
knowledge about the transaction.
10. With regard to cases files under the N I Act it would be
fit to refer to the observation of the Apex Court in Rangappa vs Sri
Mohan reported in 2010 11 SCC 441 in para 14 it has been
observed 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 hasPage 11 of 17
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been included in furtherance of the legislative objective of
improving the credibility of 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.”
10.1 The Apex Court in the case of Basalingappa vs.
Mudibasappa reported in 2019 0 AIR(SC) 1983 has observed in
Para 23 and 28 as under :
“23. We having noticed the ratio laid down by this Court in above
cases on Sections 118(a) and 139, we now summarise the
principles enumerated by this Court in following manner:
1. Once the execution of cheque is admitted Section 139 of
the Act mandates a presumption that the cheque was for
the discharge of any debt or other liability.
2. The presumption Under Section 139 is a rebuttable
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probable defence. The standard of proof for rebutting the
presumption is that of preponderance of probabilities.
3. To rebut the presumption, it is open for the Accused to
rely on evidence led by him or Accused can also rely on
the materials submitted by the complainant in order to
raise a probable defence. Inference of preponderance of
probabilities can be drawn not only from the materials
brought on record by the parties but also by reference to
the circumstances upon which they rely.
4. That it is not necessary for the Accused to come in the
witness box in support of his defence, Section 139
imposed an evidentiary burden and not a persuasive
burden.
5. It is not necessary for the Accused to come in the witness
box to support his defence.
28. We are of the view that when evidence was led before the Court
to indicate that apart from loan of Rs. 6 lakhs given to the
Accused, within 02 years, amount of Rs. 18 lakhs have been
given out by the complainant and his financial capacity being
questioned, it was incumbent on the complainant to have
explained his financial capacity. Court cannot insist on a person
to lead negative evidence.”
10.2 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:
1 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;
2 If the drawer of the cheque pays a part or whole of the
sum between the period when the cheque is drawn andPage 13 of 17
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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;
3 When a part or whole of the sum represented on the
cheque is paid by the drawer of the cheque, it must be
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;
4 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; and5 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.”
10.3 The Apex Court in the case of M/s Naresh Potteries Vs
M/s Aarti Industries And Another reported in 2025 0 INSC 1 has
observed in Para 19 as under.
“19. After discussing the discretionary powers of the Magistrate, this
Court went on to hold that the power of attorney holder may be
allowed to file, appear and depose for the purpose of issue of
process for the offence punishable under Section 138 of the NI
Act. This Court, however, cautioned that an exception to thePage 14 of 17
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above would be when the power-of-attorney holder does not
have a personal knowledge about the transactions, in which
case, he cannot be examined. Nevertheless, this Court clarified
that where the power-of- attorney holder of the complainant is
in charge of the business of the complainant payee and the
power of attorney holder alone is personally aware of the
transactions, there is no reason why he cannot depose as a
witness, however, such personal knowledge must be explicitly
asserted in the complaint and a power-of-attorney holder who
has no personal knowledge of the transactions cannot be
examined as a witness in the case”
11. In light of the above settled principles of law in cases
under the N I Act on minute appreciation of the evidence before
the learned Trial Court as discussed above the learned Trial Court
has appreciated that the accused has discharged his liability and
successfully rebutted the presumption with the standard of
preponderance of probability in the cross examination of the
complainant and has raised a probable defence regarding the
existence of a legally enforceable debt as per the judgment of the
Apex Court in Rangappa (Supra). It has also come on record that
the accused had made payments earlier but the same have not
been brought on record by the complainant and in light of the
judgment of the Apex Court in Dashrathbhai Trikambhai Patel
(Supra) as part payment was made the amount of cheque was not
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the legally enforceable debt and the accused cannot be deemed to
have committed an offence under Section 138 of the NI Act when
the cheque was dishonoured. The complainant has suppressed
material facts before the learned Trial Court and there is no
explanation about the amount shown due from the accused. As
per observation of Apex Court in the case of M/s Naresh Potteries
(supra) the authorized power of attorney can file and proceed with
the case if he has knowledge of transaction but in this case, the
complainant who has deposed had no personal knowledge about
the transaction and he can not be examined as a witness. Moreover
there has not been produced any cogent and reliable evidence to
show the legally recoverable debt of the cheque amount on the
date of issuance of the cheque.
11.1 The learned trial Court has appreciated the entire
evidence in proper perspective and there does not appear to be
any infirmity and illegality in the impugned judgment and order
of acquittal. The learned Trial Court has appreciated all the
evidence and this Court is of the considered opinion that the
learned Trial Court was completely justified in acquitting the
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accused of the offence leveled against him. The findings recorded
by the learned Trial Court are absolutely just and proper and no
illegality or infirmity has been committed by the learned trial
Court and this Court is in complete agreement with the findings,
ultimate conclusion and the resultant order of acquittal recorded
by the learned Trial Court. This Court finds no reason to interfere
with the impugned judgment and order and the present appeal is
devoid of merits and resultantly, the same is dismissed.
12. The impugned judgment and the order dated
16.09.2016 passed by the learned 4th Additional Chief Judicial
Magistrate, Palanpur in Criminal Case No. 8578 of 2013 is hereby
confirmed.
13. Bail bond stands cancelled. Record and proceedings be
sent back to the concerned Trial Court forthwith.
Sd/-
(S. V. PINTO,J)
F.S.KAZI
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