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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NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined 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 Page 2 of 15 Uploaded by F.S. KAZI(HC01075) on Tue Jan 21 2025 Downloaded on : Tue Jan 21 21:40:33 IST 2025 NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined 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 Page 3 of 15 Uploaded by F.S. KAZI(HC01075) on Tue Jan 21 2025 Downloaded on : Tue Jan 21 21:40:33 IST 2025 NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined 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 Page 4 of 15 Uploaded by F.S. KAZI(HC01075) on Tue Jan 21 2025 Downloaded on : Tue Jan 21 21:40:33 IST 2025 NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined 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 Page 5 of 15 Uploaded by F.S. KAZI(HC01075) on Tue Jan 21 2025 Downloaded on : Tue Jan 21 21:40:33 IST 2025 NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined 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 of Page 6 of 15 Uploaded by F.S. KAZI(HC01075) on Tue Jan 21 2025 Downloaded on : Tue Jan 21 21:40:33 IST 2025 NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined 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 nature Page 7 of 15 Uploaded by F.S. KAZI(HC01075) on Tue Jan 21 2025 Downloaded on : Tue Jan 21 21:40:33 IST 2025 NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined 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 be Page 8 of 15 Uploaded by F.S. KAZI(HC01075) on Tue Jan 21 2025 Downloaded on : Tue Jan 21 21:40:33 IST 2025 NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined 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 Page 9 of 15 Uploaded by F.S. KAZI(HC01075) on Tue Jan 21 2025 Downloaded on : Tue Jan 21 21:40:33 IST 2025 NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined 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. Page 10 of 15 Uploaded by F.S. KAZI(HC01075) on Tue Jan 21 2025 Downloaded on : Tue Jan 21 21:40:33 IST 2025
NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined 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 Page 11 of 15 Uploaded by F.S. KAZI(HC01075) on Tue Jan 21 2025 Downloaded on : Tue Jan 21 21:40:33 IST 2025 NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined 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 Page 12 of 15 Uploaded by F.S. KAZI(HC01075) on Tue Jan 21 2025 Downloaded on : Tue Jan 21 21:40:33 IST 2025 NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined 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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NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined
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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NEUTRAL CITATION R/CR.MA/23925/2024 ORDER DATED: 17/01/2025 undefined
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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