Gujarat High Court
Mas Financial Services Limited Thro' ... vs State Of Gujarat on 28 July, 2025
NEUTRAL CITATION
R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL APPEAL (AGAINST ACQUITTAL) NO. 178 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 LIMITED THRO' AUTHORIZED/LEGAL
OFFICER
Versus
STATE OF GUJARAT & ANR.
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Appearance:
TIRTH NAYAK(8563) for the Appellant(s) No. 1
MR ROHIT N PATEL(6045) for the Opponent(s)/Respondent(s) No. 2
MR PRANAV DHAGAT, APP for respondent respondent no. 1
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CORAM:HONOURABLE MS. JUSTICE S.V. PINTO
Date : 28/07/2025
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 01.09.2016 passed by the learned Additional Chief Judicial Magistrate, Dahod (hereinafter referred to as the "learned Trial Court") in Criminal Case No. 1019 of 2012, whereby the respondent No. 2 - original accused came to be acquitted from the Page 1 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025 NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined 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.247845 and an amount of Rs.21,864/-
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.022000 dated 20.01.2012 for Rs. 39,081/- of his account with the Central Bank of India, Freeland Ganj, Dahod Branch. The cheque was deposited in the bank of the complainant for clearing, but the same returned unpaid on 01.05.2012 with the endorsement "Funds Unsufficient". Page 2 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025
NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined The complainant gave the statutory demand notice through his advocate on 31.05.2012 which was duly served on 01.06.2012, but 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, Dahod which came to be registered as Criminal Case No.1019 of 2012. 2.2 The accused was duly served with the summons and appeared before the learned Trial Court and his plea was recorded at Exhibit 06 and the evidence of the complainant was taken on record. The complainant was examined on oath and 09 documentary evidences were produced in support of his case. 2.3 After the closing pursis was filed by the complainant, 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 but produced documentary evidences vide a list at exhibit 39 namely a copy of a postcard of the invitation for loan from the complainant company, a letter from the complainant Page 3 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025 NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined for compromise dated 06.03.2013, a copy of notice for compromise and receipt of Rs.2,000/- dated 04.10.2013 whereby the accused paid the amount. 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 appellant has preferred the 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, learned APP Mr. Pranav Dhagat for the respondent No.01 - State and learned advocate Mr. Rohit Patel for the respondent No02. Perused the impugned judgment and order of acquittal and have re-appreciated the entire evidence of the prosecution on record of the case.
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5. Learned Advocate Mr. Neel Vasant for learned advocate Mr. Tirth Nayak 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 appellant has produced cogent evidence to prove the case and has successfully proved the case against the respondent No.02 but the learned Trial Court has not considered the same and has acquitted the respondent No.02. 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 respondent No.02 guilty for the said offence. Learned Advocate has urged this Court to allow the present appeal and impose proper sentence on the respondent No.02.
6. Learned APP Mr. Pranav Dhagat for the respondent - Page 5 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025
NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined State and learned advocate Mr. Rohit Patel for the respondent No02 have jointly submitted that the learned Trial Court has appreciated all the evidence in true perspective and has not committed any error in acquitting the respondent No.02. 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 fit to refer to the observations regarding acquittal appeals made the Apex Court in the case of Constable 907 Surendra Singh & Anr Vs State of Uttarakhand reported in 2025 0 INSC 114 which are reproduced 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 Page 6 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025 NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined 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 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 Page 7 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025 NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined 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 an appeal against acquittal under Section 378 CrPC as follows : (SCC p. 584, para 8) "8. ... 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:
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 Page 8 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025 NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined 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 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 Page 9 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025 NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined 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 15 wherein the complainant has stated that a loan of Rs.21,864/- was taken by the accused and the statement of loan account is produced at exhibit 23 but there is no clarification as to how the amount of Rs.39,081/- is due. Moreover, the evidence on record 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 Page 10 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025 NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined 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 and it has emerged on record that the cheques of the accused which were given as security and were lying with the complainant. The appellant has no authority to file and proceed with the case as the appellant has stated in the cross examination that the authority letter has been issued but no power of attorney has been issued and the authority letter and the power of attorney have not been produced on record. Hence the person who deposed before the court had no personal knowledge about the loan transaction. 10 The observation of the Apex Court in Rangappa Vs Sri Mohan reported in 2010 11 SCC 441 in para 14 are 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 Page 11 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025 NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined 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:
(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.Page 12 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025
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(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 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 Page 13 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025 NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined 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 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 Page 14 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025 NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined 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-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 Page 15 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025 NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined 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 recovery manager who has deposed had no personal knowledge about the transaction and he can not be examined as a witness. Moreover, there is no 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 Page 16 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025 NEUTRAL CITATION R/CR.A/178/2017 JUDGMENT DATED: 28/07/2025 undefined 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 30.12.2016 passed by the learned Chief Judicial Magistrate, Dahod in Criminal Case No. 1019 of 2012 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 17 of 17 Uploaded by F.S. KAZI(HC01075) on Tue Jul 29 2025 Downloaded on : Wed Jul 30 01:07:18 IST 2025