Gujarat High Court

M/S Patel Shroff Thro Mohanbhai ... vs State Of Gujarat on 17 March, 2023

Bench: Nisha M. Thakore

     R/CR.MA/4432/2020                                    ORDER DATED: 17/03/2023




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
             R/CRIMINAL MISC.APPLICATION NO. 4432 of 2020
                                 With
                   R/CRIMINAL APPEAL NO. 315 of 2022
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     M/S PATEL SHROFF THRO MOHANBHAI SHANKARBHAI PATEL
                            Versus
                      STATE OF GUJARAT
==========================================================
Appearance:
MR NV GANDHI(1693) for the Applicant(s) No. 1
MR RAJESH K KANANI(2157) for the Respondent(s) No. 2,3,4
MS VRUNDA C. SHAH, APP for the Respondent(s) No. 1
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 CORAM:HONOURABLE MS. JUSTICE NISHA M. THAKORE

                                Date : 17/03/2023

                                  ORAL ORDER

1. This is an application filed under Section 378(4) of

the Code of Criminal Procedure, 1973, seeking leave to

appeal to challenge the judgment and order of acquittal nd dated 2 December, 2019 passed by the learned

Additional Civil Judge and Judicial Magistrate First

Class, Botad passed in Criminal Case No. 1095 of 2002.

By the said judgment and order, the learned Magistrate

has recorded order of acquittal of present respondent

Nos.2 to 4 for the offences punishable under Section 138

of the Negotiable Instruments Act, 1881 (in short "the

Act")

R/CR.MA/4432/2020 ORDER DATED: 17/03/2023

2. Ms. Devangi Solanki, learned advocate has appeared

on behalf of Mr. N.V. Gandhi learned advocate on record

for the applicant and Mr.Rajesh Kanani, learned advocate

has appeared on behalf of respondent Nos.2 to 4 -

original accused and Ms.Vrunda C. Shah, learned

Additional Public Prosecutor has appeared on behalf of

respondent No.1-State.

3. Ms.Solanki, at the outset, has invited attention of

this Court to the findings and reasons recorded by the

trial Court. She has submitted that the complaint was

preferred in respect of dishonour of 3 cheques bearing th Nos. (i) 818960 dated 12 October, 2002 to the sum of th Rs.6,00,000/-, (ii) 818908 dated 16 October, 2002 to the th sum of Rs.3,00,000/- and (iii) 8189302 dated 30

October, 2002 to the sum of Rs.1,50,000/-, total sum of

Rs.10,50,000/-. The aforesaid three cheques were

presented by the complainant before the Botad, th Mercantile Co-op. Bank Ltd. on 12 November, 2002. The

said cheques were returned unpaid on account of

'Insufficient funds".

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3.1. In such circumstances, the original complainant was th constrained to address statutory notice dated 18

November, 2002 to the respondents herein, which was th duly served upon respondent Nos.2 to 4 on 25

November, 2002.

3.2. It is the case of the complainant that despite the

service of said notice, the respondents-accused choose not

to make payment of the disputed amount of cheque and

had responded such notice by giving vague reply. The

complainant was therefore, constrained to approach the

competent Court by filing complaint under Section 138 of

the Act. Such complaint came to be registered as th Criminal Case No.1095 of 2002 on 30 December, 2002 before the Court of learned Additional Civil Judge and

Judicial Magistrate First Class, Botad.

3.3. Ms.Solanki further submitted that the complainant

was examined in the witness box and his evidence has

come on record vide Exh.43. Apart from the deposition of

the complainant, documentary evidence, which mainly

included the disputed cheqe (Exhs. 44, 46, 48), memo of

return of cheque (Exhs. 45, 47, 49), postal

R/CR.MA/4432/2020 ORDER DATED: 17/03/2023

acknowledgment receipts (Exhs. 52), the consent letter

(Exh. 53), promissory note (Exh.54), the money lending

form original (Exh.55), extract of accounts (Exh.58),

journal book (Rojamela) maintained by the complainant, th th dated 6 November, 1997 (Exh.59), 29 December, 1997 th th (Exh.60), 27 January, 1998 (Exh.61) and 26 March,

1998 (Exh.62) as well as voucher receipts (Exhs. 63 to

66) and the registration certificate of the Complainant -

Firm (Exh. 127). She further submitted that sufficient

evidence has come on record to establish the case of the

complainant vis-a-vis the existence of legal dues at the

instance of the respondents and therefore, submitted that

statutory presumptions under Section 139 of the Act

arose in favour of the complainant and in absence of any evidence discarding the same, the respondents ought to

have been convicted for the offence punishable under

Sections 138 of the Act. She further referred to and

relied upon the documents placed on record by way of

paper book. After going through the original complaint,

she invited attention of this Court to the Sammati th Patrak dated 30 September, 2002 executed by the

original accused - respondent Nos.2 to 4 herein. She

therefore, submitted that the respondents having

R/CR.MA/4432/2020 ORDER DATED: 17/03/2023

acknowledged the fact of borrowing the money by loan of

an amount of Rs.10,50,000/-, there was no reason for the

trial Court to not to believe the case of the complainant

about the existence of legally enforceable debt.

4. Mr.Rajesh Kanani, learned advocate for respondent

Nos. 2 to 4 vehemently objected to grant of leave. He

has invited attention of this Court to the findings

recorded by the trial Court and has submitted upon

appreciation of the evidence that the trial Court has

arrived at specific findings that no specific amount of

loan was claimed by the accused has been brought on

record or in the original complaint in respect to the

alleged transactions of year 1997-1998. He further submitted that upon detailed analysis of the documents

of the complainant, the trial Court has rightly

disbelieved the case of the complainant. At the same

time, the trial Court, upon appreciation of oral as well

as documentary evidence of the accused, has accepted the

defence raised by the accused. He further invited

attention of this Court to the cross-examination of the

complainant and submitted that the accused has been

able to rebut the presumption under Section 139 of the

R/CR.MA/4432/2020 ORDER DATED: 17/03/2023

Act. Thus, the complainant having failed to establish his

case, the trial Court has rightly recorded the order of

acquittal. He therefore, objected to grant leave to appeal.

5. Ms. Vrunda C. Shah, learned Additional Public

Prosecutor has appeared for the State and has relied

upon the impugned judgment and order of acquittal.

6. Having heard the learned counsels appearing for the

respective parties, the only question, which falls for

consideration of this Court, in the present application, is

as to whether any error of fact or law is there in the

impugned judgment and order, which calls for

interference of this Court in Appeal under Section 378 of Code of Criminal Procedure, 1973.

7. It transpires from the record that the original

complainant has brought on record various documents in

support of his case.

8. It is the case of the complainant that the

respondent Nos.2 to 4 herein - original accused had

borrowed an amount of Rs.12,50,000/- during the year

R/CR.MA/4432/2020 ORDER DATED: 17/03/2023

1997-1998 for business purpose, which was gradually

repaid. The complainant - Firm is engaged in the

business of lending of money. It transpires from the st application dated 31 March, 2001, which has come on

record vide Exh.55, that the firm had lended an amount

of Rs.15,00,000/-. The amount of Rs.15,00,000/- was

sanctioned as emerged from the cross-examination of the

complainant. It appears that no amount has been given st to the accused after 31 March, 2001. The complainant

has admitted in his cross-examination that no evidence

has been brought on record to show that any amount st has been given to the accused after 31 March, 2001.

During his cross-examination, the complainant was called

upon to show any entry regarding outstanding dues from the ledger account, which is brought on record vide Exh.

58. In fact, it has come on record that against the

amount of Rs.14,50,000/- as claimed by the complainant,

an amount of Rs. 10,50,000/- has been repaid by the

accused.

9. It further transpire that an amount of Rs.8,79,749/-

has been debited in account of the complainant under

the head of commission. Even Journal book (Rojamela),

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which has been brought on record vide Exhs.59 to 62,

does not refer to the name of the respondents-accused.

The voucher, which are brought on record as Exhs.63 to

66 runs in the name of Tulshi Enterprises. No evidence

has been brought on record to establish any relationship

between the said firm with the accused.

10. Heavy reliance is placed upon the Sammati Patrak,

which is brought on record vide Exh.53. If one closely th examines the document, which relates to 30 September,

2002, where the respondent Nos.2 to 4 have

acknowledged about availing loan of an amount of th Rs.10,50,000/- against which, three cheques dated 12 th October, 2002 (No. 818960), dated 16 October, 2002 (No.

th 818908) and dated 30 October, 2002 (No.8189302) are

submitted as security, the said document does not relate

to the transaction as alleged by the complainant in his

complain of the year 1997-1998.

11. In such circumstances, the trial Court has rightly

recorded the finding after comparing the documents, more

particularly, Exhs.53 to 55 and Exh. 58 that there does

not exist legally enforceable debt. Apt would be to refer

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to relevant observations of the Hon'ble Supreme Court,

in the case of Rangappa vs. Mohan reported in AIR

2010 SC 1898, which held as under:

"14. In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since 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 or proof. In the absence of compelling justifications, reverse onus

R/CR.MA/4432/2020 ORDER DATED: 17/03/2023

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 and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own. "

In view of the aforesaid settled legal position, the

trial Court was justified in accepting the probable

defence, which created doubt about the existence of

legally enforceable debt or liability.

12. I am of the view that in absence of compelling

justifications, though various documentary evidence were

brought on record by the original complainant as against

the claim of outstanding amount of Rs.14,50,000/-, the

entry made in the ledger book (Exh.58) about repayment

of an amount of Rs.10,50,00/- created a serious doubt

about existence of actual outstanding amount. Reference

of three cheques in the Sammati Patrak (Exh.53) creates