Gujarat High Court
Harshadrai Harakhchand Bagdai (Huf) ... vs State Of Gujarat on 31 January, 2025
NEUTRAL CITATION
R/CR.MA/2858/2022 ORDER DATED: 31/01/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC. APPLICATION NO. 2858 of 2022
(FOR LEAVE TO APPEAL)
In
R/CRIMINAL APPEAL NO. 306 of 2022
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HARSHADRAI HARAKHCHAND BAGDAI (HUF) THRO POA HITESHBHAI
HARSHADRAI BAGDAI
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR JIGNESH L HAJARE(3994) for the Applicant(s) No. 1
MR. HJ KARATHIYA(7012) 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 : 31/01/2025
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 16.03.2021 passed by the learned 12th Additional Chief Judicial Magistrate, Rajkot in Criminal Case No. 8000 of 2018, whereby the original accused - respondent No 2 herein 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"). Page 1 of 14 Uploaded by F.S. KAZI(HC01075) on Fri Jan 31 2025 Downloaded on : Sat Feb 01 05:40:36 IST 2025
NEUTRAL CITATION R/CR.MA/2858/2022 ORDER DATED: 31/01/2025 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, are as under:
2.1. The complainant is the power of attorney holder of his father Harshadrai Harakchand Bagdai and a notarized power of attorney was executed on 25.06.2018. The complainant and the accused were known to each other for many years and the accused had demanded an amount of Rs.6,65.000/- from the complainant and an amount of Rs.3,65,000/- was given in cash and the remaining amount of Rs.3,00,000/- was given by cheque No.494026 drawn on "Jeevan Commercial Bank", Bhaktinagar Branch dated 06.10.2009. The accused repaid an amount of Rs.1,30,000/- by cheque and Rs.500/- in cash and an amount of Rs.2,34,000/- by R.T.G.S., and towards the remaining amount of Rs.3,00,000/- had given cheque No.12980 dated 01.06.2018 drawn on "Bank of Baroda" Mavdi Plot Branch. The cheque was Page 2 of 14 Uploaded by F.S. KAZI(HC01075) on Fri Jan 31 2025 Downloaded on : Sat Feb 01 05:40:36 IST 2025 NEUTRAL CITATION R/CR.MA/2858/2022 ORDER DATED: 31/01/2025 undefined deposited by the complainant in his bank and the same was returned with the endorsement "fund insufficient" and the statutory demand notice was given on 08.06.2018 by R.P.A.D., which was duly served to the accused. That accused did not pay up the amount, and hence, the complainant filed the complaint before the Court of the learned Additional Chief Judicial Magistrate (Special Negotiable Instrument Court), Rajkot, which was registered as Criminal Case No.8000 of 2018.
2.2. The accused was served with the summons and appeared before the learned Trial Court and his plea was recorded at Exhibit-6 and the evidence of the applicant was taken on record.
The applicant was examined on oath and 8 documentary evidences were produced in support of his case. After the closing pursis of the applicant was filed at Exh.28-1, the further statement of the accused under Section 313 of the Code of Criminal Procedure was recorded, wherein accused stated that he has taken a loan of Rs.3,00,000/- with interest @ 1.5% per month from the applicant and he has repaid an amount of Rs.6,75,000/- including interest by cheque, NEFT and cash. The cheque in question was Page 3 of 14 Uploaded by F.S. KAZI(HC01075) on Fri Jan 31 2025 Downloaded on : Sat Feb 01 05:40:36 IST 2025 NEUTRAL CITATION R/CR.MA/2858/2022 ORDER DATED: 31/01/2025 undefined given as a security and has been misused by the applicant by himself filling in the details in the blank cheque and no legal recoverable debt was due and a false complaint has been filed. The accused examined 2 witnesses and produced 9 documentary evidences in support of his case and filed the closing pursis at Exh.42. After the arguments of the learned advocates for both the parties were heard, by 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 applicant has preferred the present application seeking leave to appeal mainly stating that the impugned judgment and order of acquittal is bad, illegal, unjust, improper and most particularly without appreciating the facts and circumstances of case and evidence on the record.
4. Heard learned advocate Mr.J.L.Hajare appearing for the applicant and learned APP Ms. Jirga Jhaveri for the respondent
- State and learned advocate Mr. H. J. Karathiya for the respondent No.2.
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NEUTRAL CITATION R/CR.MA/2858/2022 ORDER DATED: 31/01/2025 undefined
5. Learned advocate for the applicant submits that the impugned judgment and order of acquittal is illegal, unjust, improper and without appreciating the facts and circumstances of the case and the evidence on record. That the ingredients and requirements of Section 138 of the Negotiable Instrument Act are satisfied by the applicant and the cheque was presented within its validity period and the same has returned unpaid due to insufficiency of funds and the statutory notice has been duly served to the accused. That learned Trial Court ought to have convicted the accused but has recorded the impugned judgment and order of acquittal and as the applicant has a good case on merits, the present leave to appeal may be allowed.
6. Learned advocate Mr.H.J.Karathiya and learned APP Ms. Jirga Jhaveri have jointly submitted that the learned Trial Court has considered all the evidence of the applicant and the accused had examined two witnesses and has rebutted the presumption successfully. The defense of the accused is that the complainant is illegally doing business of finance and the accused was regularly paying an amount of Rs.4500/- per month from Page 5 of 14 Uploaded by F.S. KAZI(HC01075) on Fri Jan 31 2025 Downloaded on : Sat Feb 01 05:40:36 IST 2025 NEUTRAL CITATION R/CR.MA/2858/2022 ORDER DATED: 31/01/2025 undefined 20.11.2009 to 24.10.2012 and in all 29 installments were paid and an amount of Rs.2,34,000/- was paid by RTGS on 29.01.2018 but, the same has not been shown by the complainant in the complaint. The learned Trial Court has appreciated all the evidence in proper perspective and has passed the impugned judgment and order of acquittal and no interference of this Court is required and the present application for leave to appeal may be rejected.
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 principle of law of section 118 and 139 of the N.I. Act.
8. 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 Page 6 of 14 Uploaded by F.S. KAZI(HC01075) on Fri Jan 31 2025 Downloaded on : Sat Feb 01 05:40:36 IST 2025 NEUTRAL CITATION R/CR.MA/2858/2022 ORDER DATED: 31/01/2025 undefined 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."
8.1. The Apex Court in Tedhi Singh vs Narayan Dass Mahant reported in 2022 6 SCC 735 has observed in Para 7 as Page 7 of 14 Uploaded by F.S. KAZI(HC01075) on Fri Jan 31 2025 Downloaded on : Sat Feb 01 05:40:36 IST 2025 NEUTRAL CITATION R/CR.MA/2858/2022 ORDER DATED: 31/01/2025 undefined 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 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"
8.2. 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 presumption and the onus is on the Page 8 of 14 Uploaded by F.S. KAZI(HC01075) on Fri Jan 31 2025 Downloaded on : Sat Feb 01 05:40:36 IST 2025 NEUTRAL CITATION R/CR.MA/2858/2022 ORDER DATED: 31/01/2025 undefined Accused to raise the 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."
8.3. The Apex Court in Naresh Potteries vs Aarti Industries reported in 2025 0 INSC 1 in para 33.
"33. While holding that there is no serious conflict between the decisions in M.M.T.C. [M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd., (2002) 1 SCC 234: 2002 SCC (Cri) 121] and Janki Vashdeo Bhojwani [Janki Vashdeo Bhojwani v. IndusInd Bank Ltd., Page No. 8 of 15 (2005) 2 SCC 217], we clarify the position and answer the questions in the following manner:
33.1. Filing of complaint petition under Section 138 of the NI Act through power of attorney is perfectly legal and competent.Page 9 of 14 Uploaded by F.S. KAZI(HC01075) on Fri Jan 31 2025 Downloaded on : Sat Feb 01 05:40:36 IST 2025
NEUTRAL CITATION R/CR.MA/2858/2022 ORDER DATED: 31/01/2025 undefined 33.2. The power-of-attorney holder can depose and verify on oath before the court in order to prove the contents of the complaint. However, the power-of-attorney holder must have witnessed the transaction as an agent of the payee/holder in due course or possess due knowledge regarding the said transactions.
33.3. It is required by the complainant to make specific assertion as to the knowledge of the power-of-attorney holder in the said transaction explicitly in the complaint and the power-of- attorney holder who has no knowledge regarding the transactions cannot be examined as a witness in the case.
33.4. In the light of Section 145 of the NI Act, it is open to the Magistrate to rely upon the verification in the form of affidavit filed by the complainant in support of the complaint under Section 138 of the NI Act and the Magistrate is neither mandatorily obliged to call upon the complainant to remain present before the Court, nor to examine the complainant of his witness upon oath for taking the decision whether or not to issue process on the complaint under Section 138 of the NI Act.
33.5. The functions under the general power of attorney cannot be delegated to another person without specific clause permitting the same in the power of attorney. Nevertheless, the general power of attorney itself can be cancelled and be given to another person."
9. 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 as per the case of the applicant, an amount of Rs.3,65,000/- was given in cash and the amount of Rs.3,00,000/- was given by Cheque No.494027 dated 6.10.2009 of "Jeevan Commercial Bank", Bhakti Nagar branch. The Page 10 of 14 Uploaded by F.S. KAZI(HC01075) on Fri Jan 31 2025 Downloaded on : Sat Feb 01 05:40:36 IST 2025 NEUTRAL CITATION R/CR.MA/2858/2022 ORDER DATED: 31/01/2025 undefined applicant has not clearly mentioned the date on which the amount in cash was given that some amount was repaid by the accused. During the cross-examination, the applicant has not mentioned the date on which the accused required the amount in the complaint, notice and examination in chief and the reason for the requirement of the amount is also not mentioned. Moreover, the applicant has not mentioned at which place and in whose presence the amount was given to the accused and whether the transaction between his father and the accused had taken place in his presence. It appears that during the cross-examination, the applicant being the power of attorney holder of his father has stated that he did not know the replies to a number of questions and when the accused has questioned the financial capacity of the applicant. It was the duty of the applicant to produce for the documentary evidences to show his financial capacity. Moreover, the accused had examined the defense witness No.1 Dineshbhai Karshabhai Makwana at Exh.31 and the witness was the Joint Manager in Bank of Baroda, Mavdi Road Branch, who has proved that the cheque in question was from the cheque book, which was issued on 05.02.2009 and the transaction regarding the cheque has taken place in 2009. The say Page 11 of 14 Uploaded by F.S. KAZI(HC01075) on Fri Jan 31 2025 Downloaded on : Sat Feb 01 05:40:36 IST 2025 NEUTRAL CITATION R/CR.MA/2858/2022 ORDER DATED: 31/01/2025 undefined of the accused that the cheque was given as a security and was misused by the complainant 9 years after he had paid up the amount is rightly appreciated by the learned Trial Court. Moreover, the knowledge of the Power of Attorney Holder regarding the transaction has already been discussed and the learned Trial Court has concluded that the applicant has not come with a clean hand before the learned Trial Court and the accused has successfully rebutted the presumption and proved that the entire amount has been paid with interest.
10. In light of the judgment of Rangappa (Supra) the accused is not expected to discharge an unduly high standard of proof and the accused has to rebut the presumption under Section 139 of the N.I.Act and the standard for doing so is that of "preponderance of probabilities". In the instant case, the accused has successfully rebutted the presumption and has raised a probable defence and during the cross-examination of the complainant has questioned his financial capacity and has also brought on record that the complainant did not produce the necessary documents regarding his accounts. As settled by the Page 12 of 14 Uploaded by F.S. KAZI(HC01075) on Fri Jan 31 2025 Downloaded on : Sat Feb 01 05:40:36 IST 2025 NEUTRAL CITATION R/CR.MA/2858/2022 ORDER DATED: 31/01/2025 undefined Apex Court in Basalingappa (Supra) it is not necessary for the accused to step into the witness box to raise his defence, and his probable defence can be drawn out from the materials of the complainant. The applicant has during the cross examination admitted that the accused had paid 29 installments of Rs 4500/- each and an amount of ₹2,34,000/- by RTGS but the same is not mentioned in the complaint, and it clearly appears that the old cheque has been misused by the applicant. The learned Trial Court has considered all the documents produced by the applicant. The learned Trial Court has found that there is no legal debt due of the applicant, and it does not appear from record that the accused had given the said cheque to pay the legal debt. Moreover, the said cheque was a Non C.T.S. cheque which was discontinued and no code number was found on the left side of the said cheque. The applicant did not come with clean hands and the case had been filed even though the applicant had received the amount loaned with interest from the accused. The power of attorney holder did not have the proper knowledge about the transaction and had filed the case with incomplete facts and the complainant has not proved the case beyond reasonable doubts. The learned Trial court has Page 13 of 14 Uploaded by F.S. KAZI(HC01075) on Fri Jan 31 2025 Downloaded on : Sat Feb 01 05:40:36 IST 2025 NEUTRAL CITATION R/CR.MA/2858/2022 ORDER DATED: 31/01/2025 undefined appreciated all the evidence and passed the impugned judgment and order of acquittal, which is just and proper and does not require any interference of this Court.
11. 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.
12. Notice stands discharged. Record and proceedings if any, be sent back to the learned Trial Court forthwith.
13. 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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