Gujarat High Court
Shiram Finance Ltd Thro Pritesh ... vs State Of Gujarat on 28 April, 2025
NEUTRAL CITATION
R/CR.MA/10372/2024 ORDER DATED: 28/04/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR LEAVE TO APPEAL) NO. 10372
of 2024
In F/CRIMINAL APPEAL NO. 19279 of 2024
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SHIRAM FINANCE LTD THRO PRITESH MUKESHBHAI JHAKHARIYA
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR MANISH J PATEL(2131) for the Applicant(s) No. 1
MS NAMRATA R MULCHANDANI(9956) for the Applicant(s) No. 1
MR HARSHIL C DATTANI(6241) for the Respondent(s) No. 2
MS. JIRGA JHAVERI, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MS. JUSTICE S.V. PINTO
Date : 28/04/2025
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 12.04.2024 passed by the learned 10 th Additional Judicial Magistrate First Class, Jamnagar (hereinafter referred to as the "learned Trial Court") in Criminal Case No. 7325 of 2018, whereby the respondent No. 2 - original accused came to be acquitted from the offence under Section 138 of the Page 1 of 13 Uploaded by VASIM SHABBIR SAIYED(HC01902) on Mon Apr 28 2025 Downloaded on : Tue Apr 29 13:19:38 IST 2025 NEUTRAL CITATION R/CR.MA/10372/2024 ORDER DATED: 28/04/2025 undefined Negotiable Instruments Act, 1881 (hereinafter referred to as 'the N I Act").
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 filed a complaint against the accused under Section 138 of the Act, as the accused had taken a loan of Rs.5,50,000/- from the applicant on a vehicle with registration number GJ09Y6408 and the agreement value of Rs.7,48,728/- was executed. The loan was to be repaid in 33 installments and as per the account ledger an amount of Rs. 21,43,128.96/- was due. The accused had issued cheque No.180638 for the amount of ₹21,00,000/- dated 07.08.2018 from his account with Corporation Bank, Jamnagar Branch. The applicant deposited the cheque in his account and the cheque was dishonored and the reason mentioned in the return memo dated 08.08.2018 was Page 2 of 13 Uploaded by VASIM SHABBIR SAIYED(HC01902) on Mon Apr 28 2025 Downloaded on : Tue Apr 29 13:19:38 IST 2025 NEUTRAL CITATION R/CR.MA/10372/2024 ORDER DATED: 28/04/2025 undefined "Account Blocked". The applicant sent the statutory demand notice to the accused on 25.08.2018 which was duly served on 31.08.2018 and no payment was made and hence the applicant filed the criminal complaint before the Court of the Judicial Magistrate First Class, Jamnagar under Section 138 of the N I Act, 1881 which was registered as Criminal Case no. 7325 of 2018.
2.2 The accused was served with the summons and the accused appeared before the learned Trial Court and after his plea was recorded at Exh. 23 the evidence of the applicant was taken on record. The applicant was examined on oath and 08 documentary evidences were produced in support of his case and after the closing pursis at Exh. No. 42 was filed, the further statement of the accused under Section 313 of the Code of Criminal Procedure was recorded. The accused examined witness Jagandarpalbhai Rabinderpal Singh Assistant Manager, Union Bank of India, Manek Center Branch and produced 01 documentary evidence in his defence and after the arguments of the learned advocates for both the parties were heard, by the Page 3 of 13 Uploaded by VASIM SHABBIR SAIYED(HC01902) on Mon Apr 28 2025 Downloaded on : Tue Apr 29 13:19:38 IST 2025 NEUTRAL CITATION R/CR.MA/10372/2024 ORDER DATED: 28/04/2025 undefined impugned judgment and order, the learned Trial Court acquitted the accused from the offence under Section 138 of the N I Act.
3. Being aggrieved and dissatisfied with the same, the applicant 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 is perverse, erroneous and contrary to law.
4. Heard learned advocate Mr. Manish J. Patel appearing for the applicant, learned APP Ms. Jirga Jhaveri for the respondent - State and learned advocate Mr. Harshil Dattani appearing for the respondent No. 2.
5. Learned Advocate Mr. Manish J. Patel for the applicant submits that the learned Trial Court has not appreciated that the applicant has successfully established that the cheque in question was issued by the accused from the bank account maintained by him. The applicant has proved that the cheque was written by the accused and it was Page 4 of 13 Uploaded by VASIM SHABBIR SAIYED(HC01902) on Mon Apr 28 2025 Downloaded on : Tue Apr 29 13:19:38 IST 2025 NEUTRAL CITATION R/CR.MA/10372/2024 ORDER DATED: 28/04/2025 undefined dishonoured and as the applicant is the holder in due course of the cheque in question the statutory presumption under Section 139 of the N I Act is to be drawn in favour of the applicant. The learned Trial Court has not appreciated the provisions of Section 118 and 138 of the NI Act in proper perspective. The fact of the amount paid by the applicant to the accused is not negated, but the learned Trial Court has disbelieved the same. The accused had failed to rebut the presumption and hence the judgement and order of acquittal is bad in law and the leave to appeal must be granted.
6. Learned APP Ms. Jirga Jhaveri for the respondent - State and learned advocate Mr. Harshil Dattani appearing for the respondent No.02 have submitted that the learned Trial Court has appreciated all the evidence in detail in light of the citations referred to in the judgement and has passed the judgement and order of acquittal which is proper and no interference is required and hence the application for leave to appeal must be rejected.
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NEUTRAL CITATION R/CR.MA/10372/2024 ORDER DATED: 28/04/2025 undefined
7. 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 which reproduced 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 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 Page 6 of 13 Uploaded by VASIM SHABBIR SAIYED(HC01902) on Mon Apr 28 2025 Downloaded on : Tue Apr 29 13:19:38 IST 2025 NEUTRAL CITATION R/CR.MA/10372/2024 ORDER DATED: 28/04/2025 undefined 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 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 7 of 13 Uploaded by VASIM SHABBIR SAIYED(HC01902) on Mon Apr 28 2025 Downloaded on : Tue Apr 29 13:19:38 IST 2025
NEUTRAL CITATION R/CR.MA/10372/2024 ORDER DATED: 28/04/2025 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.
24. xxxx
25. xxxx
26. xxxx
27. xxxx
28. We are of the view that when evidence was led before Page 8 of 13 Uploaded by VASIM SHABBIR SAIYED(HC01902) on Mon Apr 28 2025 Downloaded on : Tue Apr 29 13:19:38 IST 2025 NEUTRAL CITATION R/CR.MA/10372/2024 ORDER DATED: 28/04/2025 undefined 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."
8. In light of the above settled principles of law and considering the arguments advanced by the learned advocates for the parties and on perusal of the record of the case the affidavit of examination in chief of the applicant has been produced at Exh. 05 wherein the applicant has narrated the facts of the complaint on oath. The applicant has produced the Loan cum Hypothecation Agreement at Exh. 31 and the Statement of Accounts at Exh. 32 and during the cross examination by the learned advocate for the accused, the applicant has stated that as per the Loan cum Hypothecation Agreement 33 installments including the principal amount and interest was to be paid and in the loan agreement at Exh. 31 it is not stated that after the 33 installments interest would be charged. The time period for the 33 installments was concluding on 20.03.2016 and in Page 9 of 13 Uploaded by VASIM SHABBIR SAIYED(HC01902) on Mon Apr 28 2025 Downloaded on : Tue Apr 29 13:19:38 IST 2025 NEUTRAL CITATION R/CR.MA/10372/2024 ORDER DATED: 28/04/2025 undefined the statement of account produced at Exh. 32 the date of loan is 18.06.2013 wherein the loan amount is ₹5,50,000/- and the amount of interest is ₹1,98,728/-. As per this document produced at Exh. 32 on 20.03.2016, the date on which the 33 installments were to conclude the total amount outstanding was ₹11,80,667/- and as per the Loan cum Hypothecation Agreement the loan value was ₹7,48,728/-. That if the customer does not pay any amount of the loan it would be a non starter, and no evidence as to how the amount of ₹21,00,000/- was outstanding has been produced. Moreover, the witness has stated that they do not give any loan in cash to the customer, but the amount of loan is deposited in their account by NEFT. The amount of loan would be deposited in the account of the person who has taken the loan and the amount would be debited from their account but he was not ready to produce his statement of account to show that the loan amount of ₹5,50,000/- was debited from his account and credited to the account of the accused.
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NEUTRAL CITATION R/CR.MA/10372/2024 ORDER DATED: 28/04/2025 undefined 8.1 The accused has examined witness Jagandarpalbhai Rabinderpal Singh at Exh. 48 and the witness was working as Assistant Manager, Union Bank of India, Manek Center Branch and he has produced the statement of the account of the accused from 20.05.2013 to 22.08.2023. In the Statement of Account produced at Exh. 50 there is no entry of ₹5,50,000/- being deposited in his account. During the cross examination by the learned advocate for the applicant the witness has stated that in the statement produced at Exh. 50 an amount of ₹2,71,814/- was deposited by cheque of Axis Bank on 28.06.2013 and ₹2,70,000/- was deposited by cash on 29.06.2013 and he did not have information as to who had deposited the account in the amount. 8.2 During the cross examination of the applicant the presumption has been successfully rebutted by the accused and the applicant has not been able to produce any documentary evidence to show that the loan amount of ₹5,50,000/- was in fact given to the accused and as to how the amount of ₹21,00,000/- which was the amount of cheque was calculated by the applicant. In the entire Page 11 of 13 Uploaded by VASIM SHABBIR SAIYED(HC01902) on Mon Apr 28 2025 Downloaded on : Tue Apr 29 13:19:38 IST 2025 NEUTRAL CITATION R/CR.MA/10372/2024 ORDER DATED: 28/04/2025 undefined evidence there is no iota of evidence as to how the amount of ₹5,50,000/- was advanced to the accused by the applicant and the learned Trial Court has discussed all the oral and documentary evidences in detail.
9. On appreciation of the entire evidence of the applicant on record it appears that the version of the applicant is not believable and the accused has successfully rebutted the presumption. The accused has successfully proved his defence and the learned Trial Court has held that the applicant has been unable to prove the legally enforceable debt of Rs.21,00,000/- and the applicant has not proved that the amount of Rs.5,50,000/- was given as loan to the accused. The learned Trial Court has held that the accused has successfully rebutted the presumption under Section 139 of the N I Act. In light of the judgements of the Apex Court in the Rangappa (supra) and Basalingappa (supra) no offence is made out under Section 138 of the N I Act and as the applicant has failed to produce reliable and cogent evidence on record about the amount of cheque being the legally recoverable debt from the accused and the applicant Page 12 of 13 Uploaded by VASIM SHABBIR SAIYED(HC01902) on Mon Apr 28 2025 Downloaded on : Tue Apr 29 13:19:38 IST 2025 NEUTRAL CITATION R/CR.MA/10372/2024 ORDER DATED: 28/04/2025 undefined has not proved his case beyond reasonable doubt and, in light of the above observation, 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, 1973 fails and is hereby dismissed.
11. Record and proceedings if any, be sent back to the learned Trial Court forthwith.
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) VASIM S. SAIYED Page 13 of 13 Uploaded by VASIM SHABBIR SAIYED(HC01902) on Mon Apr 28 2025 Downloaded on : Tue Apr 29 13:19:38 IST 2025