Gujarat High Court
Mas Financial Services Limited Through ... vs State Of Gujarat on 21 November, 2024
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R/CR.MA/13190/2024 ORDER DATED: 21/11/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR LEAVE TO APPEAL) NO. 13190
of 2024
In F/CRIMINAL APPEAL NO. 14929 of 2024
With
F/CRIMINAL APPEAL NO. 14929 of 2024
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MAS FINANCIAL SERVICES LIMITED THROUGH UMESH R. GANDHI
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR NEEL VASANT(13667) for the Applicant(s) No. 1
TIRTH NAYAK(8563) for the Applicant(s) No. 1
MS BHAKTI M JOSHI(3820) for the Respondent(s) No. 2
MS JYOTI BHATT APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
Date : 21/11/2024
ORAL ORDER
1. Present application for leave to appeal under Section
378(4) of the Code of Criminal Procedure ("Cr.P.C." for
short) is filed by the applicant- original complainant
against the judgment and order dated 1.1.2024 passed by
the learned Additional Chief Metropolitan Magistrate,
N.I. Act Court, Ahmedabad ("trial Court" for short) in
Criminal Case No. 27959 of 2021, whereby the trial Court
has acquitted respondent accused from the charges
levelled against him under Section 138 of the Negotiable
Instrument Act, 1881 ("N.I. Act" for short).
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2. Heard learned Counsel appearing for the respective
parties.
3. It is the case of the complainant that the complainant
has given loan of Rs.79,000/- to the respondent accused
for the purpose of purchasing new vehicle and for that
the respondent has executed an agreement with the
complainant and also undertook that he will pay the
installments regularly and in case of default, it is open for
the complainant to initiate appropriate proceedings.
Since the respondent was in default and therefor0e, the
complainant has repossessed the vehicle and sold the
same to the third party. Thereafter, the complainant has
also initiated the proceedings under the provision of
Section 138 of the N.I. Act by issuing statutory notice to
the respondent accused. In response thereto, the
respondent had issued a cheque bearing cheque No.
252327 dated 4.2.2021 of Rs.97,741/-. The said cheque
was deposited by the complainant in bank and the same
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was returned with an endorsement that "insufficient
funds". Thereafter, the complainant had filed the
complaint before the Competent Court and the same was
registered as Criminal Case No.27959 of 2021.
3.1 After hearing both the sides and after considering
relevant aspects and evaluating the evidence placed on
record, the trial Court vide judgment and order dated
1.1.2024 passed in Criminal Case No. 27959 of 2021
acquitted respondent accused from the charges levelled
against him under Section 138 N.I. Act.
3.2 Being aggrieved and dissatisfied with the aforesaid
judgment of acquittal the applicant has preferred present
application for leave to appeal.
4. Heard Mr. Neel Vasant, learned Counsel for the
applicant-complainant and Ms. Bhakti M. Joshi, learned
Counsel for the respondent accused.
5. Mr. Neel Vasant, learned Counsel for the appellant-
complainant has submitted that the respondent has not
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disputed the signature over the cheque and said cheque
was dishonoured by the bank on the ground of
"insufficient funds" and therefore, the respondent is
liable to pay the dues or the amount mentioned in the
cheque and since the respondent has not complied with
that statutory notice and repaid the amount and
therefore, complainant has right to initiate the
proceedings and therefore, the complainant has initiated
the proceedings under Section 138 read with Section 142
of the N.I. Act before the Competent Court.
5.1 Mr. Neel Vasant, learned Counsel for the appellant-
complainant has submitted that the respondent has
further submitted that the trial Court has failed to
appreciate the said fact and therefore, the impugned
judgment and order passed by the trial Court is bad in
law, illegal and perverse. He has further submitted that
the respondent has committed default in making regular
payment of installments and therefore, the complainant
has right to recover the amount, as per the agreement
executed by and between the parties and therefore, the
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appellant has initiated the proceedings under Section 138
read with Section 142 of the N.I. Act.
5.2 Mr. Neel Vasant, learned Counsel for the appellant
has submitted that the trial Court has committed serious
error of law and on facts both and therefore, the
impugned judgment and order passed by the trial Court is
not sustainable in the eyes of law. It is further contended
that the complainant has already produced the copy of
the resolution at exh.6, whereby it is mentioned that the
person was authorized to file the complaint and initiate
the proceedings, however the same was not considered at
the time of recording of the evidence and therefore,
under such circumstances, the impugned judgment and
order passed by the trial Court requires to be quashed
and set aside.
5.3 However, learned Counsel for the appellant candidly
submits that in view of the decision of this Court in case
of Narpat Motisingh Purohit vs. State of Gujarat and
Anr. reported in 2022 (3) G.L.R. 2056 as well as in
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view of the decision of this Court in Criminal Misc.
Application (For Leave to Appeal) No. 18020 of 2023
dated 9.4.2024 wherein, the Court has dealt with the
similar and identical facts and circumstance and the court
was not inclined to entertain the Appeal, he cannot stress
more on the decisions of this Court. Under such
circumstances, learned Counsel for the appellant urges
before the Court that present application for leave to
appeal may be allowed.
6. Against that Ms. Joshi, learned Counsel for the
respondent accused has strongly referred to and relied
upon the observations made by trial Court in the
impugned judgment and order and submitted that the
trial Court has not committed any error while passing the
impugned judgment and order of acquittal.
6.1 Ms. Joshi, learned Counsel for the respondent accused
has also submitted that the trial Court has observed that
the person who has initiated the proceedings is not
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authorized to lodge any prosecution against the present
respondent. It is also further contended that complainant
has already repossessed the vehicle and sold the same in
open market and price was not informed till date to the
respondent accused. She has submitted under the
circumstances, the proceedings initiated under Section
138 read with Section 142 of the N.I. Act. is bad in law
and against the principle of natural justice and against
the settled legal principle enunciated by this Court. She
has further submitted that in view of the observations
made by this Court in Narpat Motisingh Purohit
(supra) present application for Leave to Appeal may not
be entertained and the same may be dismissed.
7. I have perused the material available on record as well
as the documents appended thereto. I have also gone
through the record of the appeal as well as impugned
judgment and order of acquittal passed by the trial Court.
8. It appears from the record that the trial Court has after
considering the oral as well as documentary evidence and
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after considering the arguments advanced by the both
sides and after recording the statement under Section
313 of Cr.P.C., has passed the order of acquittal in favour
of the present respondent. The order was passed mainly
on the ground that the person who has initiated the
proceedings was not authorized by the company as the
Board of Directors have not issued any authorization
letter to initiate the proceedings against the respondent
accused and also on the ground that the vehicle was
repossessed by the complainant and sold in the market
and from that the complainant had recovered the money
and therefore, the agreement executed by and between
the parties was come to an end and there was no any
legally enforceable debt against the respondent accused
and also on the ground that as per the loan agreement it
was mandatory that the complainant has to inform the
borrower that the vehicle was sold and also inform the
remaining amount which is due and payable however, the
same was not intimated and informed to the respondent
accused and therefore, on all theses grounds, the trial
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Court has passed impugned judgment and order of
acquittal in favour of the respondent accused.
9. It is further noted herein that as per the judgment
rendered by the Keral High Court in the case of Sudha
Beevi vs. State of Kerala, once the finance company
exercised option to seize the vehicle, the post dated
cheque obtained from the hirer cannot be presented for
the encashment after the seizure and if any amount is due
then the company would have the remedy to recover the
balance amount by way of filing the suit for recovery.
10. In view of the above observations made by the trial
Court, in my view, the trial Court has not committed any
error in passing the impugned judgment and order. In
fact, the trial Court has taken into account all the
relevant aspects and evidence documentary as well as
oral and after going through the record has passed the
impugned order of acquittal, which in my view, does not
warrant any interference from this Court.
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11. At this stage, it is appropriate to take into account the
observations made by this Court in the case of Narpat
Motisingh Purohit vs. State of Gujarat and Anr.
reported in 2022 (3) G.L.R. 2056 wherein the Court, in
similar set of facts, after taking into account the decision
of the Hon'ble Apex Court in the case of Indus Airways
Pvt. Ltd vs. Magnum Aviation Pvt. Ltd. reported in
2014(12) SCC 539 has decided the similar case. Hence,
in my view present case is completely covered by the
above referred judgment. In the said decision of Narpat
Motisingh Purohit (supra) this Court has held as
under:-
"6. The whole of the averments in the complaint by the
respondent Company does not disclose the fact that on
28.12.2018, the vehicle being New Swift VDI,
RegistrationNo.GJ-06-FK-4360, Engine No.D13A327458,
Chasis No.MA3FHEB1S00344639, was seized by the
complaint - Company - Shriram Transport Finance
Company Ltd. One Mr. Javed Daudmiya Sandhi was
authorized to repossess the said vehicle from the
borrower due to his default of repayment of loan and the
authority letter suggests that the said person was
authorized to repossess the vehicle from anyone or from
anywhere. Mr. Gajjar stated that such fact was not
disclosed which was a material suppression, as the said
act of the respondent - Company itself suggests that
there was end to the Hire Purchase Agreement and the
accused would not be bound by any of the terms and
conditions thereafter.
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6.1 Documents on record placed by the petitioner itself
shows that the vehicle on being repossessed by the
financial Company was sold to one Mr. Kirtiji Ranchhodji
Solanki. The said documents on record have not been
denied by respondent no.2. The abstract of the
Statement of Account shows the transactions of the
cheques towards payment of the installments.
8.4 The basic ingredients for a complaint under Section
138 of the N.I. Act, would be that the cheque ought to
have been issued for discharge in whole and in part of
any debt or other liabilities, which are legally
enforceable. The said fact does not get establish in view
of act of finance Company, since the vehicle was
repossessed on 28.12.2018 and was subsequently sold to
third party. The Hire Purchase Agreement between the
owner and the hirer stood determined by act of parties,
the cheques accepted by the owner in advance for
repayment of the hire would become instruments
without consideration as the consideration has failed. In
such circumstances, the remedy available to the owner
is to realise the balance hire due from the hirer or to sue
for damages for the breach of the agreement.
9. Here, in this case, the cheque dated 13.12.2018 was
presented, which came to be dishonoured because of
funds insufficiency and the dishonoured memo was
received by the Company on 19.12.2018. Thereafter, on
28.12.2018, the vehicle was repossessed by Shriram
Transport Finance Company Ltd. - respondent no.2, the
notice demanding payment was served on 08.01.2019
and thereafter the complaint was filed on 22.02.2019.
The complainant by suppressing the fact of repossession
of vehicle before the Judicial Magistrate had prayed for
relief. The learned Magistrate thus, relying on the facts
pleaded, had issued summons. It appears that
respondent no.2 - Shriram Transport Finance Company
Ltd., has misguided the Court. Had the facts been
disclosed, the learned Judge would not have even taken
the cognizance of the matter. In view of the fact that
vehicle was seized and was sold thereafter, the
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agreement between the complainant and accused stood
terminated and there was no legally enforceable debt
when the complaint was filed before the learned
Magistrate. On repossession of vehicle, the agreement
stood terminated, therefore cheques in the hands of
financial institution becomes instrument for which
consideration has failed, even being presented and
dishonoured, no offence under Section 138 of the N.I.
Act would be attracted.
10. Thus, in view of the above discussions and
observations and taking into consideration the facts and
circumstances of the case, petition is allowed. The
proceedings of Criminal Case No.7214/2019 before the
learned Judicial Magistrate, First Class, Vadodara,
Summons dated 22.02.2019 and all the consequential
proceedings initiated in pursuance thereof are quashed
and set aside qua the present petitioner"
12. It is also now well settled that while exercising
powers under Section 378 of Cr.P.C., if the trial court
while passing the order has committed any illegality or
any perversity or has exceeded the jurisdiction, unless
and until such facts come on record, the Court is very
slow while dealing with an acquittal appeal. The Hon'ble
Apex Court has in a series of judgments enunciated the
principles while exercising jurisdiction under Section 378
against acquittal, the power of the Appellate Court is
inasmuch as re-appreciate the evidence, view or re-
consider the evidence and if the Court finds that there is
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any illegality or any irregularity in the judgment then in
that case only, the Court has power to entertain the
appeal and interfere with the order of acquittal. The
scope and principles are enunciated by the Hon'ble Apex
Court in case of Chandrappa and others Vs. State of
Karnataka reported in (2007) 4 SCC 415, more
particularly paragraphs 42 and 43, which was
subsequently re-affirmed by the Hon'ble Apex Court
Rajesh Prasad Vs. State of Bihar and another,
reported in [2022] 3 SCC 471, wherein, the Hon'ble
Apex Court has enunciated the general principles in case
of acquittal, more particularly in paragraph 26 the
general principles are set out by the Hon'ble Apex Court
based upon various decisions of the Hon'ble Apex Court.
Hence, I am in complete agreement with the findings
recorded by the trial court.
13. It is also worthwhile to refer to the decision of the
Hon'ble Supreme Court in the case of Babu
Sahebagouda Rudragoudar Vs. State of Karnataka,
reported in AIR 2024 SC 2252 = (2024) 8 SCC 149
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wherein the Hon'ble Supreme Court has held and
observed in paras - 37 to 40 as under:-
"37. This Court in the case of Rajesh Prasad v.
State of Bihar and Another, (2022) 3 SCC 471
encapsulated the legal position covering the field
after considering various earlier judgments and
held as below: -
"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 ]
" 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
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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 finding of acquittal
recorded by the trial court."
38. Further, in the case of H.D. Sundara & Ors. v.
State of Karnataka, (2023) 9 SCC 581 this Court
summarized the principles governing the exercise
of appellate jurisdiction while dealing with an
appeal against acquittal under Section 378 of CrPC
as follows: -
"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 re-appreciating 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;
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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."
39. 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:-
(a) That the judgment of acquittal suffers from
patent perversity;
(b) That the same is based on a
misreading/omission to consider material evidence
on record;
(c) 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.
40. The appellate Court, in order to interfere with
the judgment of acquittal would have to record
pertinent findings on the above factors if it is
inclined to reverse the judgment of acquittal
rendered by the trial Court."
14. Further in similar set of facts, the coordinate bench of
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this Court in Criminal Misc. Application (For Leave to
Appeal) No. 18020 of 2023 with Criminal Appeal
No.26400 of 2023 has held and observed that:-
"8. One more aspect for which this Court is not inclined
to grant leave is that in the year 2016, the autp-rickshaw
for which the loan was given was already repossessed
and it was auctioned. As per the judgment rendered by
the Kerala High Court in the case of Sudha Beevi
vs.State of Kerala where it was held that once the
finance company exercised option to seize the vehicle,
the post dated cheque obtained from the hirer cannot be
presented for the encashment after the seizure. If any
amount is still due then the finance company would have
the remedy to recover the balance amount by way of
filing the suit for recovery. Relevant observations made
is reproduced herein below:
"8.1 ...whether postdated Cheques issued by the
hirer at the time of execution of the agreement
continue to remain as valid instruments supported
by consideration once the agreement gets
"determined ipso facto"? While giving the meaning
of consideration, it was observed that
consideration is sine quo non for any legally
enforceable contract. The facts of the case, as
observed in the case of Sudha Beevi (supra)
revealed that Cheque was presented for
encashment after the vehicle was seized by the
complainant. It is was observed that, going by the
terms of agreement, it stood "determined ipso
facto" on default of the hirer to pay the
installments and also on seizure of the vehicle by
the owner. The remedy available to the owner
would be in accordance to the terms and
conditions decided. Thus, the Court thereby laid
down that once financial institution/owner
exercised option of seizure of the vehicle, the
postdated Cheques obtained from the hirer cannot
be presented for encashment after the seizure.
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Though, the owner has to take recourse to other
legal remedies for recovery of the balance amount,
if any, when the vehicle is sold subsequently, the
owner can recover the balance amount after
adjusting the sale proceeds of the vehicle.
8.2 Section 138 attracts the penal provision for
"debts or other liabilities", which may not be
legally enforceable debts or other liabilities if the
instrument by way of cheque is not supported by
consideration. Section 43 of the N.I. Act deals with
a negotiable instrument made without
consideration. If a negotiable instrument is made
or drawn without consideration it creates no
obligation of payment between the parties to the
transaction. Similarly, if the consideration for
which the instrument was made or drawn has
failed subsequently, then also the instrument
creates no obligation at all. Relevant portion of
Section 43 is reproduced herein for ready
reference:
"43. Negotiable instrument made, etc., without
consideration. - A negotiable instrument made,
drawn, accepted, indorsed, or transferred without
consideration, or for a consideration which fails,
creates no obligation of payment between the
parties to the transaction....."
15. In view of the evidence on record, it is clearly found
that the trial Court has minutely examined the evidence
and has properly appreciated the evidence on record and
also not committed any error of fact and law in acquitting
the accused for the charges levelled against him. I am in
complete agreement with the judgment and order passed
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by the trial Court acquitting the respondent accused.
16. For the foregoing reasons and considering the above
cited decision of this Court and Hon'ble Apex Court, the
present leave to appeal does not deserve to be
entertained and the same is hereby dismissed.
17. In view of dismissal of the leave to appeal, the main
appeal doses not survive and the same also stands
disposed of accordingly.
(HEMANT M. PRACHCHHAK,J)
SURESH SOLANKI
