Gujarat High Court
Mas Financial Services Ltd vs State Of Gujarat on 11 March, 2025
NEUTRAL CITATION
R/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL APPEAL (AGAINST ACQUITTAL) NO. 60 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE S.V. PINTO Sd/-
==============================================
Approved for Reporting Yes No
==============================================
MAS FINANCIAL SERVICES LTD
Versus
STATE OF GUJARAT & ANR.
==============================================
Appearance:
TIRTH NAYAK(8563) for the Appellant(s) No. 1
MR BHARGAV PANDYA, APP for the Opponent(s)/Respondent(s) No. 1
RULE SERVED for the Opponent(s)/Respondent(s) No. 2
==============================================
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 10.08.2016 passed by the learned 4th Additional Chief
Judicial Magistrate, Palanpur in Criminal Case No. 5023 of 2014,
whereby the respondent No. 2 – original accused came to be
acquitted from the offence under Section 138 of the Negotiable
Instruments Act, 1881 (hereinafter referred to as ‘the NI Act“).
Page 1 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATION
R/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
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.173961 and an amount of
Rs.17,000/- 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.065503 dated 09.02.2013 for Rs. 21,384/- of his account with
The Banaskantha Mercantile Co. Op. Bank Ltd, Dhundhiyavadi
Branch. The cheque was deposited in the bank of the
complainant for clearing, but the same returned unpaid on
20.02.2013 with the endorsement “Funds Insufficient”. The
complainant gave the statutory demand notice through his
advocate on 19.03.2013 which was duly served on 21.03.2013,
but the accused did not repay the amount, and hence, the
complainant filed the complaint under Section 138 of the Act
Page 2 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATIONR/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
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 10 and the evidence of the complainant was
taken on record. The complainant was examined on oath and 08
documentary evidences were produced in support of his case.
2.3 After the closing pursis was filed by the complainant
at Exhibit 32, 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 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
Page 3 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATION
R/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
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
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
Page 4 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATION
R/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
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 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 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.)Page 5 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATIONR/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
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 of
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
Page 6 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATION
R/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
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 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
Page 7 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATION
R/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
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:
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
Page 8 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATIONR/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
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 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 27 wherein the complainant has stated that a
Page 9 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATIONR/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
loan of ₹17,000/- was taken by the accused and the statement of17,000/- was taken by the accused and the statement of
loan account is produced at exhibit 31. The loan agreement
produced at exhibit 25 and the statement at exhibit 31 shows a
balance of ₹17,000/- was taken by the accused and the statement of 21,384/- and there is no clarification as to how the
amount of ₹17,000/- was taken by the accused and the statement of21,384/- was shown in the statement of loan
account. Moreover, the loan agreement produced at exhibit 25
does 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 castPage 10 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATIONR/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
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 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:Page 11 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATION
R/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
(i) 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.
(ii) The presumption Under Section 139 is a rebuttable
presumption and the onus is on the Accused to raise
the probable defence. The standard of proof for
rebutting the presumption is that of preponderance of
probabilities.
(iii) 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.
(iv) 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.
(v) 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:
(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;
Page 12 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATION
R/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
(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 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;
(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.”
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 the above would be when the power-of-attorneyPage 13 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATIONR/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
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 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
Page 14 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATION
R/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
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
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,
Page 15 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025
NEUTRAL CITATION
R/CR.A/60/2017 JUDGMENT DATED: 11/03/2025
undefined
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
10.08.2016 passed by the learned 4 th Additional Chief Judicial
Magistrate, Palanpur in Criminal Case No. 5023 of 2014 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
Page 16 of 16
Uploaded by F.S. KAZI(HC01075) on Wed Mar 12 2025 Downloaded on : Wed Mar 12 22:36:31 IST 2025