Gujarat High Court
Mas Financial Services Limited vs State Of Gujarat on 8 April, 2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL APPEAL (AGAINST ACQUITTAL) NO. 1805 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE S.V. PINTO
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Approved for Reporting No
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MAS FINANCIAL SERVICES LIMITED
Versus
STATE OF GUJARAT & ANR.
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Appearance:
TIRTH NAYAK(8563) for the Appellant(s) No. 1
KATHAN P GANDHI(9557) for the Opponent(s)/Respondent(s) No. 2
Ms. Dhwani Tripathi, APP for the Opponent(s)/Respondent(s) No. 1
VISHAL K ANANDJIWALA(7798) for the Opponent(s)/Respondent(s) No. 2
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CORAM:HONOURABLE MS. JUSTICE S.V. PINTO
Date : 08/04/2025
ORAL JUDGMENT
1. The present appeal is filed by the appellant - original
complainant under Section 378(4) of the Code of Criminal
Procedure, 1973 against the judgment and order of acquittal
dated 29.06.2016 passed by the learned 4 th Additional Chief
Judicial Magistrate, Palanpur in Criminal Case No. 5092 of
2012, whereby the respondent No. 2 - original accused came
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to be acquitted from the offence under Section 138 of the
Negotiable Instruments Act, 1881 (hereinafter referred to as
'the N I Act").
1.1 The parties are hereinafter referred to as "the
complainant" and "the accused" as they stood in the original
case for the sake of convenience, clarity and brevity.
2. The brief facts culled out from the memo of the present
appeal as well as the impugned judgment and order and
paper book filed by the complainant are as under:
2.1 The complainant filed a complaint against the accused
under Section 138 of the N.I.Act as the accused had taken a
loan of Rs. 43,000/- by executing agreement No.183841. As
per the agreement, the accused had to pay regular
installments, but the same were not paid and the accused
cancelled the loan and gave cheque No.023060 dated
06.02.2012 for Rs. 94,355/- of his account with The
Banasakantha Mercantile Co. Op. Bank Ltd., Rajgadhi
Branch, Palanpur. The cheque was deposited in the bank of
the complainant for clearing, but the same returned unpaid
on 20.04.2012 with the endorsement "Today's Opening
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Balance Insufficient". The complainant gave the statutory
demand notice through his advocate on 17.05.2012 which
was duly served on 18.05.2012, but the accused did not
repay the amount, and hence, the complainant filed the
complaint under Section 138 of the N I Act before the Court
of the Chief Judicial Magistrate, Palanpur.
2.2 The accused was duly served with the summons and
appeared before the learned Trial Court and his plea was
recorded at Exhibit 07 and the evidence of the complainant
was taken on record. The complainant was examined on
oath and 08 documentary evidences were produced in
support of his case.
2.3 After the closing pursis was filed by the complainant at
Exhibit 49, the further statement of the accused under
Section 313 of the Code of Criminal Procedure was
recorded, wherein the accused stated that the facts in
examination in chief and in the complaint are false and a
false complaint has been filed. The accused refused to step
into the witness box but has produced the welcome letter at
exhibit 47, receipts at exhibit 26 to 45 and copy of the
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cheque at exhibit 48 as documentary evidence in his
defence and after the arguments of the learned advocates
for both the parties were heard, by the impugned judgment
and order, the learned Trial Court acquitted the accused
from the offence under Section 138 of the N I Act.
3. Being aggrieved and dissatisfied with the same, the
complainant has preferred the present appeal mainly stating
that the learned Trial Court has not properly interpreted the
evidence and has misread the evidence and the impugned
judgment and order is perverse, erroneous and contrary to
law.
4. Heard learned Advocate Mr. Tirth Nayak appearing for
the appellant, learned APP Ms. Dhwani Tripathi for the
respondent - State and learned advocate Mr. Vishal K.
Ananjiwala for the respondent No. 2. Perused the impugned
judgment and order of acquittal and have re-appreciated the
entire evidence of the prosecution on record of the case.
5. Learned Advocate Mr. Tirth Nayak appearing for the
appellant has taken this Court through the entire evidence
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produced by the prosecution and has vehemently argued
that the learned Trial Court has not appreciated the
evidence properly and the complainant has produced cogent
evidence to prove the case and has successfully proved the
case against the accused but the learned Trial Court has
not considered the same and has acquitted the accused.
The judgment and order of acquittal passed by the learned
Trial Court is contrary to law, evidence on record and
principles of justice. The judgment and order of acquittal
passed by the learned Trial Court is based on inferences,
not warranted by facts of the case and also on presumption,
not permitted by law. Learned Advocate has urged this
Court to quash and set aside the impugned judgment and
order of acquittal and find the accused guilty for the said
offence. Learned Advocate has urged this Court to allow the
present appeal and impose proper sentence on the accused.
6. Learned APP Ms. Dhwani Tripathi for the respondent
No. 1 - State and learned advocate Mr. Vishal K. Ananjiwala
for the respondent No. 2 have submitted that the learned
Trial Court has appreciated all the evidence in true
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perspective and has not committed any error in acquitting
the accused. Therefore, no interference of this Court is
required in the impugned judgement and the order of
acquittal passed by the learned Trial Court and have urged
this Court to reject the appeal.
7. At the outset, before discussing the facts of the present
case, it would be appropriate to refer to the observations of
the Apex Court regarding scope of interference in acquittal
appeals in the case of Constable 907 Surendra Singh & Anr.
Vs State of Uttarakhand reported in 2025 0 INSC 114 the
Apex Court has observed in Para 11 and 12 as under:
"11. Recently, in the case of Babu Sahebagouda
Rudragoudar and others v. State of Karnataka, (2024)
8 SCC 149 a Bench of this Court to which one of us
was a Member (B.R. Gavai, J.) had an occasion to
consider the legal position with regard to the scope of
interference in an appeal against acquittal. It was
observed thus:
"38. First of all, we would like to reiterate the
principles laid down by this Court governing the
scope of interference by the High Court in an
appeal filed by the State for challenging acquittal
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of the accused recorded by the trial court.
39. This Court in Rajesh Prasad v. State of Bihar
[Rajesh Prasad v. State of Bihar, (2022) 3 SCC
471 : (2022) 2 SCC (Cri) 31] encapsulated the
legal position covering the field after considering
various earlier judgments and held as below :
(SCC pp. 482-83, para 29)
"29. After referring to a catena of judgments, this
Court culled out the following general principles
regarding the powers of the appellate court while
dealing with an appeal against an order of
acquittal in the following words : (Chandrappa
case [Chandrappa v. State of Karnataka, (2007) 4
SCC 415 : (2007) 2 SCC (Cri) 325] , SCC p. 432,
para 42)
'42. From the above decisions, in our considered
view, the following general principles regarding
powers of the appellate court while dealing with
an appeal against an order of acquittal emerge:
(1) An appellate court has full power to review,
reappreciate and reconsider the evidence upon
which the order of acquittal is founded.
(2) The Criminal Procedure Code, 1973 puts no
limitation, restriction or condition on exercise of
such power and an appellate court on the
evidence before it may reach its own conclusion,
both on questions of fact and of law.
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(3) Various expressions, such as, "substantial
and compelling reasons", "good and sufficient
grounds", "very strong circumstances", "distorted
conclusions", "glaring mistakes", etc. are not
intended to curtail extensive powers of an
appellate court in an appeal against acquittal.
Such phraseologies are more in the nature of
"flourishes of language" to emphasise the
reluctance of an appellate court to interfere with
acquittal than to curtail the power of the court to
review the evidence and to come to its own
conclusion.
(4) An appellate court, however, must bear in
mind that in case of acquittal, there is double
presumption in favour of the accused. Firstly, the
presumption of innocence is available to him
under the fundamental principle of criminal
jurisprudence that every person shall be
presumed to be innocent unless he is proved
guilty by a competent court of law. Secondly, the
accused having secured his acquittal, the
presumption of his innocence is further
reinforced, reaffirmed and strengthened by the
trial court.
(5) If two reasonable conclusions are possible on
the basis of the evidence on record, the appellate
court should not disturb the finding of acquittal
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recorded by the trial court.' "
40. Further, in H.D. Sundara v. State of
Karnataka [H.D. Sundara v. State of Karnataka,
(2023) 9 SCC 581: (2023) 3 SCC (Cri) 748] this
Court summarised the principles governing the
exercise of appellate jurisdiction while dealing
with Page No. 6 of 9 an appeal against acquittal
under Section 378 CrPC as follows : (SCC p. 584,
para 8)
"8. ... 8.1. The acquittal of the accused further
strengthens the presumption of innocence;
8.2. The appellate court, while hearing an appeal
against acquittal, is entitled to reappreciate the
oral and documentary evidence;
8.3. The appellate court, while deciding an appeal
against acquittal, after reappreciating the
evidence, is required to consider whether the view
taken by the trial court is a possible view which
could have been taken on the basis of the
evidence on record;
8.4. If the view taken is a possible view, the
appellate court cannot overturn the order of
acquittal on the ground that another view was
also possible; and
8.5. The appellate court can interfere with the
order of acquittal only if it comes to a finding that
the only conclusion which can be recorded on the
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basis of the evidence on record was that the guilt
of the accused was proved beyond a reasonable
doubt and no other conclusion was possible."
41. Thus, it is beyond the pale of doubt that the
scope of interference by an appellate court for
reversing the judgment of acquittal recorded by
the trial court in favour of the accused has to be
exercised within the four corners of the following
principles:
41.1. That the judgment of acquittal suffers from
patent perversity;
41.2. That the same is based on a
misreading/omission to consider material
evidence on record; and
41.3. That no two reasonable views are possible
and only the view consistent with the guilt of the
accused is possible from the evidence available on
record."
12. It could thus be seen that it is a settled legal
position that the interference with the finding of
acquittal recorded by the learned trial judge would be
warranted by the High Court only if the judgment of
acquittal suffers from patent perversity; that the same
is based on a misreading/omission to consider
material evidence on record; and that no two
reasonable views are possible and only the view
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consistent with the guilt of the accused is possible
from the evidence available on record."
8. In light of the above it is a settled principle of law that
in an appeal against acquittal, the Appellate Court is
circumscribed by limitation that no interference has to be
made in the order of acquittal unless after appreciation of
the evidence produced before the learned Trial Court, it
appears that there are some manifest illegality or perversity
which could not have been possibly arrived at by the Court.
It is also a settled principle that there is no embargo on the
Appellate Court to review the evidence but, generally the
order of acquittal shall not be interfered with as the
presumption of innocence of the accused is further
strengthened by the order of acquittal. The golden thread
which runs through the web of administration of justice in
criminal cases is that if two views are possible on the
evidence adduced in the case of the prosecution i.e. (i) guilt
of the accused and (ii) his innocence, the view, which is in
favour of the accused, should be adopted, and if the trial
Court has taken the view in favour of the accused, the
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Appellate Court should not disturb the findings of the
acquittal. The Appellate Court can interfere with the
judgment and order of acquittal only when there are
compelling and substantial reasons and the order is clearly
unreasonable and where the Appellate Court comes to
conclusion that based on the evidence, conviction is a must.
9. In light of the above settled principles of law in
acquittal appeals the evidence of the complainant on record
is appreciated and as per the record of the case the
examination in chief of the complainant is produced at
exhibit 24 wherein the complainant has stated that a loan of
₹43,000/- was taken by the accused and accused has
repaid Rs.16,857/- in cash and Rs.6,438/- by cheque but
the statement of loan account is produced at exhibit 22 is
the loan agreement produced at exhibit 21 but the loan
agreement does not show the rate of interest at which the
loan was taken and does not show the rate of penal interest
which was to be taken from the accused if the instalments
were not paid in time by the accused. If the document
produced at exhibit 22 is produced an amount of ₹27,818/-
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is shown as balance on 22.02.2007 and on the same date
and amount of ₹28,300/- is also written and service charge
₹29,265/-, miscellaneous dealer ₹42,335/- and an amount
of ₹72,265/- as miscellaneous dealer and an amount of
₹70,818/- on the same day as miscellaneous dealer is
written. On 28.02.2007 the amount of ₹68,672/- is shown
and the loan agreement at exhibit 21, which is dated
23.02.2007 shows that an amount of ₹43,000/- was given
as loan, but the amount on 22.02.2007 shows ₹70,818/-
and on 28.02.2007 the amount of ₹68,672/- is shown. This
difference of amount regarding the amount of loan taken by
the accused has not been explained by the complainant and
on 31.03.2011 and 31.08.2011 late interest ₹12,423/- and
₹8482/- are shown, but there is no explanation as to how
these amounts as late interest have been charged.
9.1 The accused has produced various receipts at exhibits
26 to 45, and an amount of ₹500/- is deposited on
06.04.2009, 22.07.2010, 22.10.2007, 15.12.2010,
14.02.2011, 28.02.2011, 20.03.2011, 16.11.2011 and
31.12.2011 but the said amounts are not reflected in the
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statement of account produced by the complainant. The
calculations of the amounts of late interest, penal interest
service charge, miscellaneous dealer debit etc. shown in the
statement of loan account have not been clarified by the
complainant. Moreover the complainant did not have any
personal knowledge about the transaction and had deposed
before the learned Trial Court on the basis of the record.
10. With regard to cases filed under the N I Act it would be
fit to refer to the observation of the Apex Court in Rangappa
vs Sri Mohan reported in 2010 11 SCC 441 in para 14 it has
been observed 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
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accused to raise a defence wherein the existence of a
legally enforceable debt or liability can be contested.
However, there can be no doubt that there is an initial
presumption which favours the complainant. Section
139 of the Act is an example of a reverse onus clause
that has been included in furtherance of the legislative
objective of improving the credibility of negotiable
instruments. While Section 138 of the Act specifies a
strong criminal remedy in relation to the dishonour of
cheques, the rebuttable presumption under Section
139 is a device to prevent undue delay in the course of
litigation. However, it must be remembered that the
offence made punishable by Section 138 can be better
described as a regulatory offence since the bouncing of
a cheque is largely in the nature of a civil wrong whose
impact is usually confined to the private parties
involved in commercial transactions. In such a
scenario, the test of proportionality should guide the
construction and interpretation of reverse onus
clauses and the accused/defendant cannot be
expected to discharge an unduly high standard of
proof. In the absence of compelling justifications,
reverse onus clauses usually impose an evidentiary
burden and not a persuasive burden. Keeping this in
view, it is a settled position that when an accused has
to rebut the presumption under Section 139, the
standard of proof for doing so is that of 'preponderance
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of probabilities. Therefore, if the accused is able to
raise a probable defence which creates doubts about
the existence of a legally enforceable debt or liability,
the prosecution can fail. As clarified in the citations,
the accused can rely on the materials submitted by the
complainant in order to raise such a defence and it is
conceivable that in some cases the accused may not
need to adduce evidence of his/her own."
10.1 The Apex Court in the case of Basalingappa vs.
Mudibasappa reported in 2019 0 AIR(SC) 1983 has observed
in Para 23 and 28 as under :
"23. We having noticed the ratio laid down by this
Court in above cases on Sections 118(a) and 139, we
now summarise the principles enumerated by this
Court in following manner:
(i) Once the execution of cheque is admitted
Section 139 of the Act mandates a
presumption that the cheque was for the
discharge of any debt or other liability.
(ii) The presumption Under Section 139 is a
rebuttable presumption and the onus is on the
Accused to raise the probable defence. The
standard of proof for rebutting the
presumption is that of preponderance of
probabilities.
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(iii) To rebut the presumption, it is open for the
Accused to rely on evidence led by him or
Accused can also rely on the materials
submitted by the complainant in order to raise
a probable defence. Inference of preponderance
of probabilities can be drawn not only from the
materials brought on record by the parties but
also by reference to the circumstances upon
which they rely.
(iv) That it is not necessary for the Accused to
come in the witness box in support of his
defence, Section 139 imposed an evidentiary
burden and not a persuasive burden.
(v) It is not necessary for the Accused to come in
the witness box to support his defence.
28. We are of the view that when evidence was led
before the Court to indicate that apart from loan of Rs.
6 lakhs given to the Accused, within 02 years, amount
of Rs. 18 lakhs have been given out by the
complainant and his financial capacity being
questioned, it was incumbent on the complainant to
have explained his financial capacity. Court cannot
insist on a person to lead negative evidence."
10.2 The Apex Court in the case of Dashrathbhai
Trikambhai Patel vs Hitesh Mahendrabhai Patel & Anr.
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reported in 2023 1 SCC 578 has observed as under.
"30. In view of the discussion above, we summarise
our findings below:
(i) For the commission of an offence under Section
138, the cheque that is dishonoured must
represent a legally enforceable debt on the date of
maturity or presentation;
(ii) If the drawer of the cheque pays a part or whole
of the sum between the period when the cheque
is drawn and when it is encashed upon maturity,
then the legally enforceable debt on the date of
maturity would not be the sum represented on
the cheque;
(iii) When a part or whole of the sum represented on
the cheque is paid by the drawer of the cheque, it
must be endorsed on the cheque as prescribed in
Section 56 of the Act. The cheque endorsed with
the payment made may be used to negotiate the
balance, if any. If the cheque that is endorsed is
dishonoured when it is sought to be encashed
upon maturity, then the offence under Section
138 will stand attracted;
(iv) The first respondent has made part-payments
after the debt was incurred and before the cheque
was encashed upon maturity. The sum of rupees
twenty lakhs represented on the cheque was not
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the 'legally enforceable debt' on the date of
maturity. Thus, the first respondent cannot be
deemed to have committed an offence under
Section 138 of the Act when the cheque was
dishonoured for insufficient funds; and
(v) The notice demanding the payment of the 'said
amount of money' has been interpreted by
judgments of this Court to mean the cheque
amount. The conditions stipulated in the provisos
to Section 138 need to be fulfilled in addition to
the ingredients in the substantive part of Section
138. Since in this case, the first respondent has
not committed an offence under Section 138, the
validity of the form of the notice need not be
decided."
10.3 The Apex Court in the case of M/s Naresh Potteries Vs
M/s Aarti Industries And Another reported in 2025 0 INSC
1 has observed in Para 19 as under.
"19. After discussing the discretionary powers of the
Magistrate, this Court went on to hold that the power
of attorney holder may be allowed to file, appear and
depose for the purpose of issue of process for the
offence punishable under Section 138 of the NI Act.
This Court, however, cautioned that an exception to
the above would be when the power-of-attorney holder
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does not have a personal knowledge about the
transactions, in which case, he cannot be examined.
Nevertheless, this Court clarified that where the power-
of- attorney holder of the complainant is in charge of
the business of the complainant payee and the power
of attorney holder alone is personally aware of the
transactions, there is no reason why he cannot depose
as a witness, however, such personal knowledge must
be explicitly asserted in the complaint and a power-of-
attorney holder who has no personal knowledge of the
transactions cannot be examined as a witness in the
case"
11. In light of the above settled principles of law in cases
under the N I Act on minute appreciation of the evidence
before the learned Trial Court as discussed above the
learned Trial Court has appreciated that the accused has
discharged his liability and successfully rebutted the
presumption with the standard of preponderance of
probability in the cross examination of the complainant and
has raised a probable defence regarding the existence of a
legally enforceable debt as per the judgment of the Apex
Court in Rangappa (Supra) and Basalingappa (supra). It
has also come on record that the accused was not paying
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the amounts of the installments regularly and had made
payments earlier but the same have not been brought on
record by the complainant and in light of the judgment of
the Apex Court in Dashrathbhai Trikambhai Patel (Supra)
as part payment of the loan was made the amount of
cheque was not the legally enforceable debt and the accused
cannot be deemed to have committed an offence under
Section 138 of the NI Act when the cheque was
dishonoured. The complainant has also suppressed material
facts before the learned Trial Court and there is no
explanation about the amount shown due from the accused.
As per observation of Apex Court in the case of M/s Naresh
Potteries (supra) the authorized power of attorney can file
and proceed with the case if he has knowledge of
transaction but in this case, the complainant who has
deposed had no personal knowledge about the transaction
and he can not be examined as a witness. Moreover the
complainant has not produced any cogent and reliable
evidence to prove the legally recoverable debt of the cheque
amount on the date of issuance of the cheque.
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12. The learned trial Court has appreciated the entire
evidence in proper perspective and there does not appear to
be any infirmity and illegality in the impugned judgment
and order of acquittal. The learned Trial Court has
appreciated all the evidence and this Court is of the
considered opinion that the learned Trial Court was
completely justified in acquitting the accused of the offence
leveled against him. The findings recorded by the learned
Trial Court are absolutely just and proper and no illegality
or infirmity has been committed by the learned trial Court
and this Court is in complete agreement with the findings,
ultimate conclusion and the resultant order of acquittal
recorded by the learned Trial Court. This Court finds no
reason to interfere with the impugned judgment and order
and the present appeal is devoid of merits and resultantly,
the same is dismissed.
13. The impugned judgment and the order dated
29.06.2016 passed by the learned 4 th Additional Chief
Judicial Magistrate, Palanpur in Criminal Case No. 5092 of
2012 is hereby confirmed.
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14. Bail bond stands cancelled. Record and proceedings be
sent back to the concerned Trial Court forthwith.
(S. V. PINTO,J)
VASIM S. SAIYED
