Patel Ashishkumar Jayantilal vs Patel Prakashbhai Joitaram
2023 Latest Caselaw 2509 Guj

   R/CR.MA/7067/2022                                     ORDER DATED: 27/03/2023




          IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

          R/CRIMINAL MISC.APPLICATION NO. 7067 of 2022

                 In R/CRIMINAL APPEAL NO. 743 of 2022
                                With
                  R/CRIMINAL APPEAL NO. 743 of 2022
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                       PATEL ASHISHKUMAR JAYANTILAL
                                   Versus
                        PATEL PRAKASHBHAI JOITARAM
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Appearance:
MR HB CHAMPAVAT(6149) for the Applicant(s) No. 1
Ms. Vrunda C Shah, Addl. PUBLIC PROSECUTOR                                 for     the
Respondent(s) No. 2
URVESH M PRAJAPATI(8878) for the Respondent(s) No. 1
VIVEK M BRAHMBHATT(10076) for the Respondent(s) No. 1
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 CORAM:HONOURABLE MS. JUSTICE NISHA M. THAKORE
                  Date : 27/03/2023
                    ORAL ORDER

1.0. Heard Mr.Rakshit Patel, learned advocate who has appeared on behalf of Mr.Champavat, learned advocate for the applicant, Mr. Urvesh Prajapati, learned advocate for the respondent no.1 and Ms. Vrunda Shah, learned Additional Public Prosecutor for the respondent State.

2.0. This is an application seeking leave to appeal under Section 378(4) of the Code of Criminal Procedure challenging the impugned judgment and order of acquittal dated 10.02.2022 passed by the learned Chief Judicial Magistrate, Visnagar in Criminal Case No.569 of 2014, whereby, learned trial Court has acquitted the respondent no.1 - original accused from the offence punishable under Section 138 of the Negotiable Instruments Act.

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3.0. Before going into the merits of the case, it would be appropriate to consider the case of the complainant. The gist of the complaint as contended by the original complainant is as under:

3.1. The applicant and the respondent no.1 - original accused were friends and respondent no.1 was in need of an amount of Rs.10 lakhs to start a business. It is contended by the complainant that respondent no.1 had approached the original complainant in the month of December of 2013 seeking financial help of an amount of Rs.10 lakhs. It is further contended by the complainant that at the relevant point of time such huge amount was not available with the complainant and had assured the respondent no.1 to arrange such amount after a period of 10 days. It is the case of the complainant that on 1.11.2014 he had withdrawn an amount of Rs.5,95,000/-from his bank account and remaining amount of Rs.4,05,000/- was arranged from friends and the relatives. The complainant has claimed to have advanced an amount of Rs.10 lakhs to the respondent no.1.

3.2. Upon completion of period of two months, the complainant had started demanding the aforesaid amount, the accused had issued cheque dated 9.4.2014 of Dena Gujarat Gramin Bank, Kansa Branch bearing cheque no.178627 of an amount of Rs.10 lakhs which was signed in presence of the complainant. It is further contended that the accused had assured the complainant of realization of the amount on presentation of such cheque. The complainant had relied upon the aforesaid assurance of accused and had presented the said cheque on

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9.4.2014. However, the said cheque was dishonored on 10.04.2014 which was handover along with returned memo with endorsement of "insufficient funds" which was received on 10.04.2014.

3.3. In such circumstances, the complainant was constrained to give legal notice dated 15.4.2014, which was sent on the known address of the accused by Registered Post AD. It is further contended that the said notice was duly served on accused on 17.4.2014. It is submitted by the complainant that the vague reply was given by the accused to the aforesaid legal notice. Since the amount had remained unpaid, on expiry of period of 15 days, the complainant had filed complaint on 09.05.2014 under Section 138 of the Negotiable Instruments Act. The said complaint was registered as Criminal Case No.569 of 2014 before the Court of Chief Judicial Magistrate, at Visnagar, Dist.Mehsana.

4. The learned Magistrate had proceeded with verification of the complainant and had issued summons on the accused which were duly served and the accused had appeared before the concerned Court. The plea of the accused was recorded vide Exh.5 wherein the accused had denied the case of the complainant. The trial Court had proceeded for recording of evidence.

5. The trial Court had framed two issues for adjudication, the same are reproduced as under:

(I). Whether the complainant has beyond doubt proved that

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the complainant has complied with the mandatory provisions envisage under Section 138 and Section 142(1)(b) of the Negotiable Instruments Act while filing the present complaint ? (II). Whether the complainant has beyond doubt proved that the accused has handed over the cheque against the legally enforceable debt, which being dishonored on the ground of "insufficient funds", has committed offence under Section 138 of the Negotiable Instruments Act ?

6. The complainant has led oral as well as documentary evidence. He has offered himself in the witness box and has been cross-examined. The said oral evidence of the complainant has come on record vide Exh.7. Apart from the oral evidence, the complainant has brought on record the documentary evidence which includes the disputed cheque (Exh.10), receipt of acknowledging deposit of the amount in the bank (Exh.11), original return memo of the cheque (Exh.12), legal notice (Exh.14), Postal slip (Exh.15), acknowledgment slip (Exh.16), closing pursis (Exh.84), forwarding letter of the Bank (Exh.13), Income Tax Return for AY 2013-14 to 2016-17 (Exhs. 76 to 79) and statement of Bank Account of Bank of Baroda (Exh.80).

7. The accused on the other hand has placed on record the documentary evidence which includes Registered Post AD receipt (Exh.63), reply given by the accused to the legal notice (Exh.65) and copy of the UPC (Exh.64). The further statement of the accused has been recorded under Section 313 of the Code of Criminal Procedure. The accused has raised specific defence by submitting that complainant was one of the partner in Krishna

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Lease Finance and had misused the blank signed cheque of the complainant by incorporating details, the complainant has tried to encash the amount without any existence of transaction or consent of the complainant. The complainant has placed written submissions which is forming part of the record at Exh.106.

8. At the outset, the trial Court has upon examination of the record noted that the mandatory requirement under Section 118 and Section 139 of the Negotiable Instruments Act, for filing of complaint under Section 138 of the Negotiable Instruments Act, has been fulfilled. The trial Court has proceeded to closely scrutinize the cross-examination of the complainant. On evaluation of the evidence of the complainant, the learned Magistrate has found the version of the complainant of having advanced huge amount of Rs.10 lakhs suspicious in absence of promissory note or any agreement reduced in writing. As against that, the complainant has admitted in cross that his annual income does not exceed an amount of Rs.5 lakhs. The learned Magistrate has also noticed discrepancy about the landing of the amount as mentioned in the complaint and what has been stated in the deposition of the complainant. At one stage, the complainant has relied upon the entry of withdrawal of an amount of Rs.5,70,000/- by self cheque on 1.1.2014, which as per the say of the complainant in complaint was an amount of Rs.5,95,000/-. However, no evidence has been placed on record that such amount was given to the accused. The complainant has admitted in his cross examination that no documents have been brought on record in support of his case. With such glaring facts, the learned Magistrate has disbelieved the case of the

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complainant of having advanced hand loan of an amount of Rs.10 lakhs in cash to the accused and has therefore, proceeded to record order of acquittal.

9. Mr.Rakshit Patel, learned advocate has appeared on behalf of the applicant and has placed on record the copy of the reply given by the accused to the legal notice, which is brought on record by the accused at Exh.65 before the trial Court. He has submitted that inadvertently aforesaid copy was not produced along with list of document by the complainant. He has further submitted that no adverse inference can be drawn against the complainant for not producing copy of the reply to the legal notice. He has further submitted that the trial Court has failed to appreciate the provision of Section 139 of the Negotiable Instruments Act, more particularly, when accused had not disputed his signature on the disputed cheque. The statutory presumption was required to be drawn in favour of the complainant as regards existence of legally enforceable debt or liability against accused. He has further submitted that it was for the drawer of the cheque to rebut such presumption by leading cogent and convincing reasons regarding consideration. He has further submitted that except for cross-examination of the complainant no material evidence has been placed on record which has resulted into rebuttal of the presumption drawn in favour of the complainant by virtue of statutory provision. In such circumstance, the trial Court ought not to have shifted the burden of proof on the complainant to prove his case beyond the reasonable doubt. He has further submitted that on irrelevant consideration, the learned Magistrate has proceeded to record

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the order of acquittal.

10. In support of his submissions, he has relied upon the decision of the Hon'ble Supreme Court in the case of Tedhi Singh vs. Narayan Dass Mahant reported in (2022) 6 SCC 735. By relying upon the legal principle culled out, he submitted that the complainant can only be called upon to give his evidence unless case is set up in the reply to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity. He submitted that in fact the obligation is on the accused to demonstrate that the complainant in a particular case did not have the capacity and therefore the case of the accused would only be accepted by producing independent material, namely, by examining his witnesses and producing documents. He, therefore, submitted that the trial Court committed error in shifting burden upon the complainant to prove his financial capacity, which otherwise was not a ground raised in the reply to the legal notice by the accused. He, therefore, urge this Court to grant leave to appeal.

11. On the other hand, Mr. Urvesh Prajapati, learned advocate for the respondent no.1- accused has vehemently objected to grant of leave to appeal. He has invited attention of this Court to the cross examination of the original complainant. He has also relied upon the copy of the reply addressed to the original complainant by the accused. By referring to the said reply, he has submitted that the complainant has intentionally not placed on record the aforesaid reply as a very specific defence was

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raised in the reply by the accused. He has submitted that in fact on close examination of the cross examination of the complainant it has come on record that the complainant was one of the partner of the Krishna Lease Finance firm and the complainant had misused the cheque of the accused, which were otherwise handed over to the accused as security cheque towards the loan availed by the accused for purchase of the Honda Civic Car. He has further submitted that in the reply given to the legal notice specific averment was made by the complainant about the aforesaid loan and its repayment inspite of which the complainant had failed to handover the cheques given by the complainant.

12. In support of his case, he has relied upon the decision of the Hon'ble Supreme Court in the case of Vijay vs. Laxman reported in (2013) 3 SCC 86 for the proposition of law that expressions "until the contrary is proved" and "unless the contrary is proved", appearing in Section 118(a) and Section 139 of the Negotiable Instruments Act, indicates that the presumption drawn in favour of the holder of the cheque on contrary being proved, stands shifted. This rebuttal can be pursuant to the probable defence, evidence of rebuttal or even on scrutiny of the evidence of the complainant. In the given case, applying the aforesaid principle, the Hon'ble Supreme Court proceeded to confirm the judgment and order of acquittal to avoid unwarranted conviction and mis-carriage of justice. He has further relied upon the decision of the Hon'ble Supreme Court in the case of Krishna Janardhan Bhat vs. Dattatraya G Hedge reported in (2008) 4 SCC 54 and has submitted that standard of

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proof so far as accused is concerned, is based on the preponderance of probabilities, inference of which can be drawn not only from the materials brought on record but also from the surrounding circumstances. As against that, the prosecution was expected to prove the case against the accused, beyond reasonable doubt. Lastly, he has relied upon the decision of this Court in the case of Bhagwandas Gangarambhai vs. Pradipkumar Hargovanbhai reported in 2022 (4) GLR 3101 and has submitted that this Court after considering the various decisions of the Hon'ble Supreme Court has held that the presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence, the standard of proof of rebutting such presumption is that of "preponderance of probabilities". By making aforesaid submission, learned advocate for the respondent- original accused requested not to grant leave to appeal.

13. The only question which falls for consideration of this Court is whether the learned Magistrate committed error in recording order of acquittal while shifting the burden upon the original complainant to prove the case beyond the reasonable doubt.

14. From the record, on facts the learned Magistrate upon close scrutiny of the cross examination of the complainant has recorded finding that the complainant claims to have advanced huge amount of Rs.10 lakhs in cash to the accused without any agreement reduced in writing or execution of any promissory note. The learned Magistrate has furhter noticed that though the

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complainant is in the business of construction and is filing return of income, however he claims to have annual income of an amount of Rs.5 lakhs. As against that, the complainant himself has admitted that he has no evidence to show that he had advanced amount of Rs.10 lakhs by hand loan to accused. The learned Magistrate notice that against an amount of Rs.10 lakhs the complainant has placed on record the statement of bank account which goes to suggest that an amount of Rs.5,70,000/- was withdrawn on 1.1.2014 by self cheque. As against that in the complaint it is contended that an amount of Rs.5,95,000/- was withdrawn from the account on 1.1.2014. The complainant has offered an explanation that an amount of Rs.4,05,000/- was arranged from other sources and in all total amount of Rs.10 lakhs was advanced as loan to the accused. Thus, the learned Magistrate has found discrepancy in the claim of the complainant. The learned Magistrate has also taken into consideration the reply to the statutory notice which is brought on record vide Exh.65 produced by the accused. It has come on record that the complainant had failed to place on record the said reply along with evidence of the prosecution. On bare reading of the content of the aforesaid reply and the cross examination of the complainant, very specific defence has been brought on record by the accused about misuse of cheque which the accused claims to have given to one Krishna Finance towards different transactions. By the aforesaid evidence, the accused has raised probable defence by alleging the original complainant to be one of the partner of the said Finance Company.

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15. Under Section 138 of the Negotiable Instruments Act, once the cheque is issued by the drawer, a presumption under Section 139 of the Negotiable Instruments Act in favour of the holder would be attracted. Section 139 creates a statutory presumption that a cheque received in the nature referred to under Section 138 of the Negotiable Instruments Act is for the discharge in whole or in part of any debt or other liability. The initial burden lies upon the complainant to prove the circumstances under which the cheque was issued in his favour and that the same was issued in discharge of a legally enforceable debt.

16. It is for the accused to adduce evidence of such facts and circumstances to rebut the presumption that such debt does not exist or that the cheques are not supported by consideration.

17. Considering the scope of the presumption to be raised under Section 139 of the Act and the nature of evidence to be adduced by the accused to rebut the presumption, in Kumar Exports v. Sharma Carpets(2009) 2 SCC 513, the Supreme Court in paras (14-15) and paras (18-20) held as under:-

"14.Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, 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.

15. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Evidence Actall presumptions must come under one or the other

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class of the three classes mentioned in the Act, namely, (1) "may presume" (rebuttable), (2) "shall presume" (rebuttable), and (3) "conclusive presumptions" (irrebuttable). The term "presumption" is used to designate an inference, affirmative or disaffirmative of the existence of a fact, conveniently called the "presumed fact" drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means "taking as true without examination or proof".

18. Applying the definition of the word "proved" in Section 3of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.

19. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over.

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20. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non- existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non- existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114of the Evidence Act to rebut the presumptions arising under Sections 118and139of the Act."

18. So far as reliance placed by the learned advocate for the applicant on the decision of the Hon'ble Supreme Court in the

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case of Tedhi Singh (supra) is concerned, it was the case where the appellant had approached the Hon'ble Supreme Court seeking leave against the judgment of the High Court. The High Court in exercise of powers under Section 397 of the Code of Criminal Procedure had dismissed the Criminal Revision Application, against order of Sessions Judge, by which, the Court in turn had affirmed the order passed by the Chief Judicial Magistrate holding the appellant guilty for offence under Section 138 of the Negotiable Instruments Act. The appellant was awarded sentence to simple imprisonment for a period of one year and was further called upon to pay compensation of a sum of Rs.7 lakhs. The appellant - original complainant had questioned the judgment of the High Court by inviting attention of the Hon'ble Supreme Court to the fact that issue with regard to the financial capacity of the complainant was not set up as a defence while replying to the statutory notice by the accused. In the aforesaid process of challenge, the Hon'ble Supreme Court went to examine the process of rebuttal of presumption in the facts of the case. The Hon'ble Supreme Court while referring to its earlier judgment in the case of Basalingappa vs. Mudibasappa reported in (2019) 5 SCC 418 applied the principle of reverse onus as carved out in the decision of the Hon'ble Supreme Court in the case of Rangappa vs. Sri Mohan reported in (2010) 11 SCC 441 and held that what the accused needs to establish is a probable defence. The Hon'ble Supreme Court in para 10 and 11 further proceeded to observe as under:

"10. The Trial Court and the First Appellate Court have noted that in the case under Section 138 of the N. I. Act the complainant need not show in the first instance that he had the capacity. The proceedings

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under Section 138 of the N. I. Act is not a civil suit. At the time, when the complainant gives his evidence, unless a case is set up in the reply notice to the statutory notice sent, that the complainant did not have the wherewithal, it cannot be expected of the complainant to initially lead evidence to show that he had the financial capacity. To that extent the Courts in our view were right in holding on those lines. However, the accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent materials, namely, by examining his witnesses and producing documents. It is also open to him to establish the very same aspect by pointing to the materials produced by the complainant himself. He can further, more importantly, achieve this result through the cross examination of the witnesses of the complainant. Ultimately, it becomes the duty of the Courts to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence.

11. We have gone through the nature of the evidence in this case. We also bear in mind the fact that three Courts have held in favour of the respondent. In this regard we bear in mind that though it is true that reply notice was sent by the appellant, therein he admits the case of the respondent that the parties were having a cordial relationship. In the reply notice the appellant has not set up any case that the respondent did not have the financial capacity to advance the loan. In fact even we notice that there is no reference to the loss of the cheque book or signed cheque leaf. No complaint was given of the loss of the cheque book or the signed cheque leaf either to the police or to the bank."

19. Thus, it is evident that even the Hon'ble Supreme Court has recognized the process of cross-examination of the witnesses of the complainant to be considered as a way to bring on record probable defence. At the same time obligation is put on the

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Court to consider carefully and appreciate the totality of the evidence and then come to a conclusion whether in the given case, the accused has shown that the case of the complainant is in peril for the reason that the accused has established a probable defence. It is true that the appellant in the given set of facts having failed to raise defence with regard to the financial capacity to advance loan, the Hon'ble Supreme Court having further noticed that no complaint was given or no reference was made with regard to loss of cheque book or signed cheque leaf, proceeded to hold so. It is in this peculiar facts, the Court has observed so.

20. In the present case, the accused has set up the specific defence in the reply given to the legal notice sent by the complainant. The accused has specifically raised the case of complainant being partner in a Krishna Lease Finance and the manner in which the cheque has been misused. The complainant in his cross examination has categorically admitted about defence of misuse of a signed blank cheques lying with Krishna Finance, being taken in reply to notice. He has admitted that no document about having annual income of Rs.10 lakhs is brought on record. He has clarified in fact that as he is not earning, therefore, it is not produced. No documents of savings had been brought on record. However, he has shown readiness to bring account of FY 2013 to FY 2015. He has also admitted in cross that except for signature, the date, name and name of payee appears in different hand writing. Subsequently, the complainant has brought on record Income Tax Returns filed for AY 2013-14 to 2016-17 which is exhibited at Exh. 76 to Exh.80.

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However, the fact remains that in none of the year, the annual income has gone beyond Rs.3 lakhs i.e. less than Rs.10 lakhs. He has also admitted that at no stage amount of Rs.10 lakhs was available as balance in his accounts. In opinion of this Court, the accused counsel in cross examination has raised probable defence by questioning his financial capacity which raised serious doubt of the very claim of handing over the loan of Rs.10 lakhs in cash to accused. Thus, the existence of legally enforceable debt in absence of cogent material brought by the complainant, has not been established.

21. In view of the aforesaid evidence brought on record, in my opinion, the learned Magistrate has rightly shifted the burden upon the complainant to prove the case beyond reasonable doubt. In absence of any cogent material being brought on record in the form of evidence, the learned Magistrate has proceeded to record the order of acquittal.

22. For the forgoing reasons, No error can be attributed to the learned Magistrate in recording order of acquittal of respondent- accused. Accordingly, application for leave to appeal stands rejected.

In view of rejection of application for leave to appeal, Criminal Appeal also stands rejected.

(NISHA M. THAKORE,J) KAUSHIK J. RATHOD