Bombay High Court
Rashmikant Zaverchand Shah vs Dharmesh Chapsi Ghada And Anr on 14 October, 2025
Author: N. J. Jamadar
Bench: N. J. Jamadar
2025:BHC-AS:44635
CRIWP950-2025.DOC
Santosh
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL WRIT PETITION NO. 950 OF 2025
Rashmikant Zaverchand Shah ...Petitioner
Versus
1. Dharmesh Chapsi Ghada
2. The State of Maharashtra ...Respondents
Mr. Rohaan Cama, a/w Prerak Choudhary, i/b Prerak
Choudhary, for the Petitioner.
Mr. Jatin Karia (Shah), a/w Snehankita Munj, Dipti Jatin
Karia, Shraddha Kamble, for Respondent No.1.
SANTOSH Mr. Ashok Gawai, APP for the State-Respondent No.2.
SUBHASH
KULKARNI
CORAM: N. J. JAMADAR, J.
Digitally signed by
SANTOSH SUBHASH
KULKARNI
RESERVED ON: 18th SEPTEMBER, 2025
Date: 2025.10.14
19:13:30 +0530 PRONOUNCED ON: 14th OCTOBER, 2025
JUDGMENT:
-
1. Rule. Rule made returnable forthwith and, with the
consent of the learned Counsel for the parties, heard finally.
2. By this petition under Article 227 of the Constitution of
India the petitioner - appellant takes exception to an order
dated 3rd December, 2025 in Criminal Misc. Application
No.1995 of 2024, passed by the learned Additional Sessions
Judge for Greater Mumbai at Mazgaon, whereby while
suspending the sentence imposed on the appellant - accused
by the learned Magistrate in CC No.1137/SS/2021, the
learned Additional Sessions Judge directed the appellant to
CRIWP950-2025.DOC
deposit 20% of the compensation awarded by the learned
Magistrate under Section 148(1) of the Negotiable
Instruments Act, 1881 ("the NI Act, 1881").
3. Shorn of superfluities, the background facts can be
stated as under:
3.1 The respondent - complainant lodged a complaint
under Section 138 of the NI Act, 1881, with the allegation that
the complainant had advanced by way of loan a sum of
Rs.2,67,75,000/-, on various occasions, during the period
10th April, 2018 to 20th February, 2021. The accused had
acknowledged the liability to repay the said amount by
executing Demand Promissory Notes. Towards the payment of
the said loan amount, the accused has drawn three cheques
for the sum of Rs.89,25,000/-, each, payable on 15 th March,
2021. All the cheques were dishonored on presentment. A
demand notice was issued on 15 th April, 2021. The accused
neither complied with the demand nor gave any reply thereto.
Hence, the complaint.
3.2 The accused contested the existence of the debt or
liability and sought to dispel the presumptions by contending
that the complainant had not advanced the loan, as alleged,
and the subject cheques were obtained by way of security for
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some business transactions. The complainant had fabricated
the Demand Promissory Note. Even the demand notice was
not served on the accused. It was, inter alia, contended that
the alleged claim of the complainant of having advanced a
huge amount of Rs.2,67,75,000/- in cash was otherwise in
violation of the provisions of Income Tax Act, 1961 and
related to unaccounted transactions, which were illegal.
3.3 By a judgment and order dated 2nd September, 2024,
the learned Magistrate found the accused guilty of the offence
punishable under Section 138 of the NI Act, 1881 and
sentenced him to suffer simple imprisonment for one year
and also pay compensation to the tune of Rs.2,67,75,000/-
with a default stipulation.
3.4 Being aggrieved, the accused preferred an appeal before
the Court of Session.
3.5 By the impugned order, the learned Sessions Judge
directed the accused to deposit 20% of the compensation
amount as a condition for suspension of sentence. The
learned Sessions Judge was of the view that the accused
failed to make out any exceptional circumstance to suspend
the sentence without making such deposit.
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4. Being aggrieved, the accused has invoked the writ
jurisdiction.
5. I have heard Mr. Rohaan Cama, the learned Counsel for
the petitioner - accused, and Mr. Jatin Karia, the learned
Counsel for the respondent - complainant, at some length.
With the assistance of the learned Counsel for the parties, I
have also perused the material on record.
6. Mr. Cama, the learned Counsel for the petitioner,
mounted a multi-pronged challenge to the impugned order.
Firstly, the learned Sessions Judge, according to Mr. Cama,
lost sight of the fact that the power to direct the appellant to
make the deposit of a portion of the amount of the
compensation awarded by the trial Court is discretionary.
The learned Sessions Judge, as is evident from the impugned
order, proceeded to decide the issue as if it was mandatory to
direct the appellant to deposit the amount. Secondly, the
learned Sessions Judge had not ascribed any reason to arrive
at the conclusion that the petitioner failed to make out an
exceptional case. No reason, worth its name, has been
ascribed by the learned Sessions Judge. Thirdly, the learned
Sessions Judge, did not delve into the substantial grounds of
challenge to the judgment of the trial Court, which make out
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an exceptional case. The very fact that the complainant
claimed to have advanced a huge amount of Rs.2,67,75,000/-
in cash ought to have put the court on guard. Cash
transactions have been judicially recognized to be
unaccounted and illegal transactions. To insist for deposit of
20% of the compensation amount, even when the underlying
transaction was in cash, would render the right of appeal
illusory, submitted Mr. Cama.
7. To buttress these submissions, Mr. Cama placed
reliance on a judgment of the Supreme Court in the case of
G. Pankajakshi Amma and others vs. Mathai Mathew (Dead)
through LRs and another1 and a decision of a learned Single
Judge of this Court in the case of Sanjay Mishra vs.
Kanishka Kapoor @ Nikki and another2.
8. Mr. Cama, however, fairly submitted the decision in the
case of Sanjay Mishra (supra) has been overruled by a
Division Bench of this court in the case of Prakash
Madhukarrao Desai vs. Dattatraya Sheshrao Desai 3.
Nonetheless, in view of the decision in the case of G.
Pankajakshi Amma (supra) and a recent judgment of the
1 (2004) 12 Supreme Court Cased 83.
2 2009(4) Mh.L.J. 155.
3 (2023) 5 Mah LJ 709.
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Supreme Court in the case of Correspondence, RBANMS
Educational Institution vs. B. Gunasheka & Another4, the
issue of unenforceability of the liability arising out of cash
transactions can not be said to be conclusively settled.
9. Mr. Cama would also urge that, the learned Sessions
Judge did not also delve into the aspect of due service of the
demand notice, and the petitioner not being a drawer of one
of the cheques, which goes to the root of the matter. Had the
learned Sessions Judge dealt with these challenges and then
arrived at the conclusion that no exceptional case was made
out, different considerations would have come into play. The
impugned order, according to Mr. Cama, singularly lacks
reasons for not suspending the sentence without imposing
the condition of deposit.
10. Per contra, Mr. Karia, the learned Counsel for the
respondent - complainant, would urge the transactions in
question cannot be termed to be unaccounted transactions.
The advances to the petitioner made by the complainant in
cash have been duly reported in the annual tax reports.
There is overwhelming material in the form of the promissory
notes under which the liability has been clearly
4 AIR 2025 SC (Civil) 1425.
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acknowledged. Therefore, the challenge sought to be mounted
on the premise that the underlying transactions are
unaccounted transactions is unworthy of consideration. Mr.
Karia further submitted that, it is not an immutable rule of
law that under no circumstances, the liability incurred out of
the transactions in cash can be enforced. Even otherwise,
cash transactions are not per se illegal or void. Reliance was
placed by Mr. Karia on a judgment of the learned Single
Judge of this Court in the case of Dr. Jagannath Ganesh
Hegde vs. M/s. In Depth Entertaining Arts Pvt. Ltd. and ors. 5.
11. Referring to the conduct of the petitioner, Mr. Karia
would urge, the petitioner had sought extension of time
before the learned Sessions Judge to make the deposit and,
by an order dated 7th February, 2025, the time came to be
extended. Despite undertaking to pay the amount, the
petitioner has invoked the writ jurisdiction so as to deprive
the complainant of his legitimate claim.
12. Section 148(1) of the NI Act, 1881 reads as under:
"148. Power of Appellate Court to order payment pending
appeal against conviction.--
(1) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), in an appeal by the
drawer against conviction under section 138, the Appellate
Court may order the appellant to deposit such sum which
shall be a minimum of twenty per cent. of the fine or
compensation awarded by the trial Court:
5 2016 SCC OnLine Bom 10400.
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Provided that the amount payable under this sub-
section shall be in addition to any interim compensation paid
by the appellant under section 143A."
13. Section 148(1) of the NI Act, 1881 was introduced by the
Parliament as the payees suffered grave prejudice on account
of the dilatory tactics of unscrupulous drawers of dishonored
cheques and due to easy filing of appeals and stay to the
sentence imposed by the trial Court, in those appeals. The
Parliament was of the view that such delay has compromised
the sanctity of the cheque transactions. Thus, to address the
issue of undue delay in final resolution of cheque dishonour
cases so as to provide relief to payees of dishonored cheques
and discourage frivolous and unnecessary litigation which
would save time and money, the Parliament inserted Section
148 empowering the Appellate Court to order the appellant to
deposit such sum which shall be a minimum of 20% of fine
or compensation awarded by the trial Court.
14. Section 148 of the NI Act, 1881 does not take away the
right of appeal of the accused. It empowers the Appellate
Court to order the appellant to deposit a portion of the fine or
compensation awarded by the trial Court as a condition for
the suspension of the sentence.
CRIWP950-2025.DOC
15. In the case of Surinder Singh Deswal alias Colonel S. S.
Deswal and ors. vs. Virender Gandhi6, the Supreme Court,
exposited the objective and the import of the provisions. The
Supreme Court emphasised that the provisions of Section
148 of the NI Act, 1881 were required to be interpreted in a
purposive manner so as to advance the object of the Act. The
observations of the Supreme Court in paragraph 8 read as
under;
"8. Now so far as the submission on behalf of the
appellants that even considering the language used in
Section 148 of the NI Act as amended, the appellate court
"may" order the appellant to deposit such sum which shall be
a minimum of 20% of the fine or compensation awarded by
the trial court and word used is not "shall" and therefore the
discretion is vested with the first appellate court to direct the
appellant-accused to deposit such sum and the appellate
court has construed it as mandatory, which according to the
learned Senior Advocate for the appellants would be contrary
to the provisions of Section 148 of the NI Act as amended is
concerned, considering the amended Section 148 of the NI
Act as a whole to be read with the Statement of Objects and
Reasons of the amending Section 148 of the NI Act, though it
is true that in the amended Section 148 of the NI Act, the
word used is "may", it is generally to be construed as a "rule"
or "shall" and not to direct to deposit by the appellate court
is an exception for which special reasons are to be assigned.
Therefore amended Section 148 of the NI Act confers power
upon the appellate court to pass an order pending appeal to
direct the appellant-accused to deposit the sum which shall
not be less than 20% of the fine or compensation either on
an application filed by the original complainant or even on
the application filed by the appellant-accused under section
389 Cr.P.C. to suspend the sentence. The aforesaid is
required to be construed considering the fact that as per the
amended section 148 of the NI Act, minimum of 20% of the
fine or compensation awarded by the trial court is directed to
be deposited and that such amount is to be deposited within
a period of 60 days from the date of the order, or within such
further period not exceeding 30 days as may be directed by
6 (2019) 11 SCC 341.
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the Appellate Court for sufficient cause shown by the
Appellant. Therefore, if amended Section 148 of the NI Act is
purposively interpreted in such a manner it would serve the
Objects and Reasons of not only amendment in section 148
of the NI Act, but also Section 138 of the NI Act. The
Negotiable Instruments Act has been amended from time to
time so as to provide, inter alia, speedy disposal of cases
relating to the offence of the dishonour of cheques. So as to
see that due to delay tactics by the unscrupulous drawers of
the dishonoured cheques due to easy filing of the appeals
and obtaining stay in the proceedings, an injustice was
caused to the payee of a dishonoured cheque who has to
spend considerable time and resources in the court
proceedings to realise the value of the cheque and having
observed that such delay has compromised the sanctity of
the cheque transaction, Parliament has thought it fit to
amend Section 148 of NI Act. Therefore, such a purposive
interpretation would be in furtherance of the Objects and
Reasons of the amendment in Section 148 of the NI Act and
also Section 138 of the NI Act."
(emphasis supplied)
16. In the case of Jamboo Bhandari vs. Madhya Pradesh
State Industrial Development Corporation Limited and
Others7, the Supreme Court expounded that under Section
148(1) of the NI Act, 1881, discretion is vested in the Appellate
Court whether or not to direct the accused to make the
deposit of 20% of the amount of fine or compensation
awarded by the trial Court. It was enunciated that it was
always open for the Appellate Court to consider whether it is
an exceptional case which warrants grant of suspension of
sentence without imposing the condition. Explaining the ratio
of the decision of Surinder Singh Deswal (supra), the
Supreme Court enunciated the law as under:
7 (2023)
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"6. What is held by this Court is that a purposive
interpretation should be made of Section 148 of the N.I. Act.
Hence, normally, Appellate Court will be justified in imposing
the condition of deposit as provided in Section 148. However,
in a case where the Appellate Court is satisfied that the
condition of deposit of 20% will be unjust or imposing such a
condition will amount to deprivation of the right of appeal of
the appellant, exception can be made for the reasons
specifically recorded.
7. Therefore, when Appellate Court considers the prayer
under Section 389 of the Cr.P.C. of an accused who has been
convicted for offence under Section 138 of the N.I. Act, it is
always open for the Appellate Court to consider whether it is
an exceptional case which warrants grant of suspension of
sentence without imposing the condition of deposit of 20% of
the fine/compensation amount. As stated earlier, if the
Appellate Court comes to the conclusion that it is an
exceptional case, the reasons for coming to the said
conclusion must be recorded."
(emphasis supplied)
17. In the case of Muskan Enterprises and another vs.
State of Punjab and Another8, the Supreme Court had an
occasion to consider the apparent cleavage in the judicial
opinions in the cases of Surinder Singh Deswal (supra) and
Jamboo Bhandari (supra). The Supreme Court clarified the
legal position as under:
"26. Wearing the glasses of the statute-maker, we need to
read the text as set in the context. What is most significant is
that the legislature has used both the verbs 'may' and shall'
in sub-section (1) of Section 148, N.I. Act, but in different
contexts. As we read and understand the sub-section, what
we find is that the verb 'may', implies discretion; and, if
intended to have its natural meaning, it would refer to the
discretion left to the Appellate Court to determine as to
whether such court should order any deposit to be made by
the appellant or not pending hearing of the appeal against
the conviction and sentence recorded by the trial court. What
Jamboo Bhandari (supra) lays down is that deposit may not
be ordered if the Appellate Court finds a case to be
exceptional not calling for a deposit and the reasons for not
ordering a deposit are recorded in the order. On the contrary,
the verb 'shall' used in the same sentence and distanced
8 2025 SCC OnLine SC 4107.
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from the verb 'may' by 8 (eight) words, typically implies an
obligation or duty that is referable to the quantum of deposit,
that is, the deposit, in any case, must not be less than 20%
of the fine or compensation awarded by the trial court. What
follows is that once the Appellate Court is satisfied that a
deposit is indeed called for, in an appropriate case, such
court's power is in no way fettered to call upon the appellant
to deposit more than 20% of the awarded compensation, but
in no case can it be less than 20%. Interestingly, while the
proviso to sub-section (1) and sub-section (2) of Section 148
use 'shall' in the relevant context, sub-section (3) again
reverts to 'may' and its proviso to 'shall'. User of the verbs
'may' and 'shall' in different contexts in the same section is
clearly suggestive of the legislative intent to mean what it
said.
27. We may take the discussion a little forward to
emphasize our point of view. There could arise a case before
the Appellate Court where such court is capable of forming
an opinion, even in course of considering as to what would
be the appropriate quantum of fine or compensation to be
kept in deposit, that the impugned conviction and the
consequent sentence recorded/imposed by the trial court is
so wholly incorrect and erroneous that it is only a matter of
time for the same to be set aside and that ordering a deposit
would be unnecessarily burdensome for the appellant. Such
firm opinion could be formed on a plain reading of the order,
such as, the conviction might have been recorded and
sentence imposed without adherence to the mandatory
procedural requirements of the N.I. Act prior to/at the time
lodging of the complaint by the complainant rendering the
proceedings vitiated, or the trial court might have rejected
admissible evidence from being led and/or relied on
inadmissible evidence which was permitted to be led, or the
trial court might have recorded an order of conviction which
is its ipse dixit, without any assessment/analysis of the
evidence and/or totally misappreciating the evidence on
record, or the trial court might have passed an order failing
to disclose application of mind and/or sufficient reasons
thereby establishing the link between the appellant and the
offence, alleged and found to be proved, or that the
compensation awarded is so excessive and outrageous that it
fails to meet the proportionality test: all that, which would
evince an order to be in defiance of the applicable law and,
thus, liable to be labelled as perverse. These instances,
which are merely illustrative and not exhaustive, may not
arise too frequently but its possibility cannot be completely
ruled out. It would amount to a travesty of justice if exercise
of discretion, which is permitted by the legislature and could
indeed be called for in situations such as these pointed out
above, or in any other appropriate situation, is not permitted
to be exercised by the Appellate Court by a judicial
interpretation of 'may' being read as 'shall' in sub-section (1)
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of Section 148 and the aggrieved appellant is compelled to
make a deposit of minimum 20% of the fine or compensation
awarded by the trial court, notwithstanding any opinion that
the Appellate Court might have formed at the stage of
ordering deposit as regards invalidity of the conviction and
sentence under challenge on any valid ground. Reading 'may'
as 'may' leads to the text matching the context and,
therefore, it seems to be just and proper not to denude the
Appellate Court of a limited discretion conferred by the
legislature and that is, exercise of the power of not ordering
deposit altogether albeit in a rare, fit and appropriate case
which commends to the Appellate Court as exceptional.
While there can be no gainsaying that normally the
discretion of the Appellate Court should lean towards
requiring a deposit to be made with the quantum of such
deposit depending upon the factual situation in every
individual case, more so because an order under challenge
does not bear the mark of invalidity on its forehead, retention
of the power of such court not to order any deposit in a given
case (which in its view and for the recorded reasons is
exceptional) and calling for exercise of the discretion to not
order deposit, has to be conceded. If indeed the legislative
intent were not to leave any discretion to the Appellate Court,
there is little reason as to why the legislature did not also use
'shall' instead of 'may' in sub-section (1). Since the self-same
section, read as a whole, reveals that 'may' has been used
twice and 'shall' thrice, it must be presumed that the
legislature was well and truly aware of the words used which
form the skin of the language. Reading and understanding
the words used by the legislature in the literal sense does not
also result in manifest absurdity and hence tinkering with
the same ought to be avoided at all costs. We would,
therefore, read 'may' as 'may' and 'shall' as 'shall', wherever
they are used in Section 148. This is because, the words
mean what they say."
(emphasis supplied)
18. On a textual and contextual interpretation of the
provisions contained in Section 148(1) and the use the words,
"may' and "shall" in the main part of sub-section (1) as well
as in the proviso to sub-section (1) of Section 148, the
Supreme Court has postulated that Jamboo Bhandari (supra)
lays down that deposit may not be ordered if the Appellate
Court finds a case to be exceptional not calling for a deposit
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and the reasons for not ordering a deposit are to be then
recorded in the order. However, once the Appellate Court is
satisfied that a deposit is indeed called for, in an appropriate
case, such court's power is in no way fettered to call upon the
appellant to deposit more than 20% of the awarded
compensation, and in no case can it be less than 20%.
19. The legal position which thus emerges is that discretion
is undoubtedly vested in the Appellate Court in the matter of
ordering the appellant - accused to make the deposit.
However, the discretion ought to be exercised in such fashion
as to advance the object with which Section 148 of the NI Act,
1881, has been introduced. It is in an exceptional case,
where the order of deposit would amount to putting an
unncessary and uncalled burden on the appellant - accused,
the Appellate Court ought to refrain from making such order.
Ordinarily, such situation may arise where the order of
conviction and sentence impugned before the Appellate Court
suffers from manifest errors and illegalities or there were
other peculiar circumstances which render the order of
deposit unjust and inequitable.
20. The principal submission of Mr. Cama was that, in the
case at hand, on account of the fact that the alleged advance
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of a huge amount of Rs.2,67,75,000/- was in cash, the
illegality of the transaction was writ large. Such an
unaccounted transaction is per se illegal and, consequently,
the subject cheques could not have been said to have been
drawn in discharge of a legally enforceable debt or liability.
Attention of the Court was invited to the observations of the
Supreme Court in the case of G. Pankajakshi Amma (supra).
21. In the said case, the respondent therein had advanced
money in cash. The respondent was engaged in money
lending business. The respondent had not maintained the
books of account as mandated under the provisions of Kerala
Money Lenders Act, 1958. In that context, the Supreme
Court observed, where the respondent had paid the amount
in cash and those transactions were unaccounted then they
were illegal transactions. No Court can come to the aid of the
party in an illegal transaction. In such cases, the loss must
be allowed to lie where it falls. As those transactions were
unaccounted, the Court could not have lent its hand and
passed the decree.
22. In the case of Sanjay Mishra (supra) a learned Single
Judge of this Court, in a case arising out of a complaint
under Section 138 of the NI Act, 1881, in the context of
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categorical admissions that the amount advanced was
entirely in cash and was unaccounted, and the same was not
disclosed in the Income Tax Return, held that the liability to
repay unaccounted cash amount cannot be said to be a
legally enforceable liability within the meaning of the
Explanation to Section 138 of the NI Act, 1881.
23. At this stage, it is necessary to immediately notice that
discordant views were recorded in other judgments,
necessitating a reference to a Division Bench of this Court.
24. In the case of Prakash Desai (supra) the Division Bench
considered the following question:
"Whether in case the transaction, is not reflected in the
Books of account and/or the Income Tax Returns of the
holder of the cheque in due course and thus is in violation ot
the provisions of section 269-SS of the Income Tax Act, 1961
whether such a transaction, can be held to be "a legally
enforceable debt" and can be permitted to be enforced, by
institution of proceedings under section 138 of the Negotiable
Instruments Act.?"
25. After considering the provisions of the NI Act, 1881 and
Income Tax Act, 1961 and the governing precedents, the
Division Bench held that a transaction not reflected in the
books of accounts and/or Income Tax Returns of the holder
of the cheque in due course can be permitted to be enforced
by instituting proceedings under Section 138 of the NI Act,
1881 in view of the presumption under section 139 of the Act
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of 1881 that such cheque was issued by the drawer for the
discharge of any debt or other liability, execution of the
cheque being admitted. Violation of Section 269-SS and /or
Section 271-AAD of the Income Tax Act, 1961 would not
render the transaction unenforceable under Section 138 of
the NI Act, 1881. The decision in Sanjay Mishra (supra) was
overruled.
26. Though Mr. Cama sought to resurrect the controversy
by placing reliance upon a judgment of the Supreme Court in
the case of RBANMS Educational Institution (supra), wherein
the Supreme Court gave directions to the courts and
authorities to intimate the transactions in which it is claimed
that Rs.2,00,000/- and above was paid by cash, to the
Income Tax Authorities, yet, in the context of the prosecution
under Section 138 of the NI Act, 1881 a recent
pronouncement of the Supreme Court in the case of Sanjabi
Tari vs. Kishore S. Borcar and anr. 9 puts the controversy at
rest.
27. The Supreme Court disapproved the view of the Kerala
High Court in the case of P. C. Hari vs. Shine Varghese and
anr.10, wherein it was held that a debt created by a cash
10 2025 SCC OnLine Ker 5535.
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transaction above Rs.20,000/- in violation of the provisions
of Section 269SS of the Income Tax Act, 1961 was not a
legally enforceable debt. The Supreme Court observed as
under:
"19. Recently, the Kerala High Court in P.C. Hari vs. Shine
Varghese & Anr. has taken the view that a debt created by a
cash transaction above Rs. 20,000/- (Rupees Twenty
Thousand) in violation of the provisions of Section 269SS of
the Income Tax Act, 1961 (for short 'IT Act, 1961') is not a
'legally enforceable debt' unless there is a valid explanation
for the same, meaning thereby that the presumption under
Section 139 of the Act will not be attracted in cash
transactions above Rs. 20,000/- (Rupees Twenty Thousand).
20. However, this Court is of the view that any breach of
Section 269SS of the IT Act, 1961 is subject to a penalty only
under Section 271D of the IT Act, 1961. Further neither
Section 269SS nor 271D of the IT Act, 1961 state that any
transaction in breach thereof will be illegal, invalid or
statutorily void. Therefore, any violation of Section 269SS
would not render the transaction unenforceable under
Section 138 of the NI Act or rebut the presumptions under
Sections 118 and 139 of the NI Act because such a person,
assuming him/her to be the payee/holder in due course, is
liable to be visited by a penalty only as prescribed.
Consequently, the view that any transaction above
Rs.20,000/- (Rupees Twenty Thousand) is illegal and void
and therefore does not fall within the definition of 'legally
enforceable debt' cannot be countenanced. Accordingly, the
conclusion of law in P.C. Hari (supra) is set aside."
(emphasis supplied)
28. In view of the aforesaid enunciation of law, the edifice of
the submission of Mr. Cama that an exceptional case was
made out on account of the underlying transaction having
been entered into in cash, gets dismantled.
29. On facts, Mr. Karia was justified in canvassing a
submission that the transactions in question cannot be said
to be unaccounted as the complainant had reported those
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transactions as loans advanced to the accused in the Income
Tax Returns. This Court may hasten to add that the
reference to the Income Tax Returns is only for the purpose of
ascertaining whether the accused had made out an
exceptional case for the waiver of the deposit, and these
observations may not be construed as an expression of
opinion on the merits of the appeal to be decided by the
learned Sessions Judge.
30. The other grounds of non-service of the notice and the
petitioner not being the drawer of one of the cheques, though
a signatory thereto, are, at best, contentious and debatable
issues. It is necessary to note that each and every
contentious and debatable issue does not amount to an
exceptional circumstance. In every appeal filed by the
accused, debatable issues in regard to the legality, propriety
and correctness of the judgment impugned therein, could be
raised. However, every debatable issue may not justify an
inference that an exceptional case is made out. Such an
inference can be legitimately drawn where the order of the
trial Court is ex facie perverse, manifestly illegal, in
derogation of the settled principles of law, or there is non-
compliance of the statutory requirements or the Appellate
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Court finds the existence of debt or liability prima facie
doubtful.
31. True, it could be urged that the learned Sessions Judge
could have ascribed more elaborate reasons to come to a
conclusion that the appellant failed to make out an
exceptional case. However, that does not necessarily imply
that the impugned order is sans reasons.
32. In any event, this Court has considered the principal
contention canvassed on behalf of the petitioner premised, on
the underlying transaction being a cash transaction, and
found the same, in view of the development in law, not worthy
enough to constitute an exceptional circumstance. Therefore,
no interference is warranted in the impugned order.
33. Hence, the following order:
:ORDER:
(i) The petition stands dismissed.
(ii) Rule discharged.
(iii) No order as to costs.
[N. J. JAMADAR, J.]
