Gujarat High Court
Harshadrai Harakhchand Bagdai (Huf) ... vs State Of Gujarat on 31 January, 2025
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R/CR.MA/2858/2022 ORDER DATED: 31/01/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC. APPLICATION NO. 2858 of 2022
(FOR LEAVE TO APPEAL)
In
R/CRIMINAL APPEAL NO. 306 of 2022
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HARSHADRAI HARAKHCHAND BAGDAI (HUF) THRO POA HITESHBHAI
HARSHADRAI BAGDAI
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR JIGNESH L HAJARE(3994) for the Applicant(s) No. 1
MR. HJ KARATHIYA(7012) for the Respondent(s) No. 2
MS JIRGA JHAVERI, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MS. JUSTICE S.V. PINTO
Date : 31/01/2025
ORAL ORDER
1. The present application is filed by the applicant -
original complainant under Section 378(4) of the Code of Criminal
Procedure, 1973 (for short "Cr.P.C.") seeking leave to file an
appeal against the judgment and order dated 16.03.2021 passed by
the learned 12th Additional Chief Judicial Magistrate, Rajkot in
Criminal Case No. 8000 of 2018, whereby the original accused -
respondent No 2 herein came to be acquitted from the charge
levelled against him under Section 138 of the Negotiable
Instruments Act, 1881 (hereinafter referred to as 'the Act").
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1.1 The respondent No.2 is hereinafter referred to as "the
accused" as he 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
application as well as the impugned judgment and order, are as
under:
2.1. The complainant is the power of attorney holder of his
father Harshadrai Harakchand Bagdai and a notarized power of
attorney was executed on 25.06.2018. The complainant and the
accused were known to each other for many years and the accused
had demanded an amount of Rs.6,65.000/- from the complainant
and an amount of Rs.3,65,000/- was given in cash and the
remaining amount of Rs.3,00,000/- was given by cheque
No.494026 drawn on "Jeevan Commercial Bank", Bhaktinagar
Branch dated 06.10.2009. The accused repaid an amount of
Rs.1,30,000/- by cheque and Rs.500/- in cash and an amount of
Rs.2,34,000/- by R.T.G.S., and towards the remaining amount of
Rs.3,00,000/- had given cheque No.12980 dated 01.06.2018 drawn
on "Bank of Baroda" Mavdi Plot Branch. The cheque was
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deposited by the complainant in his bank and the same was
returned with the endorsement "fund insufficient" and the
statutory demand notice was given on 08.06.2018 by R.P.A.D.,
which was duly served to the accused. That accused did not pay
up the amount, and hence, the complainant filed the complaint
before the Court of the learned Additional Chief Judicial
Magistrate (Special Negotiable Instrument Court), Rajkot, which
was registered as Criminal Case No.8000 of 2018.
2.2. The accused was served with the summons and
appeared before the learned Trial Court and his plea was recorded
at Exhibit-6 and the evidence of the applicant was taken on record.
The applicant was examined on oath and 8 documentary
evidences were produced in support of his case. After the closing
pursis of the applicant was filed at Exh.28-1, the further statement
of the accused under Section 313 of the Code of Criminal
Procedure was recorded, wherein accused stated that he has taken
a loan of Rs.3,00,000/- with interest @ 1.5% per month from the
applicant and he has repaid an amount of Rs.6,75,000/- including
interest by cheque, NEFT and cash. The cheque in question was
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given as a security and has been misused by the applicant by
himself filling in the details in the blank cheque and no legal
recoverable debt was due and a false complaint has been filed. The
accused examined 2 witnesses and produced 9 documentary
evidences in support of his case and filed the closing pursis at
Exh.42. After the arguments of the learned advocates for both the
parties were heard, by impugned judgment and order, the learned
Trial Court acquitted the accused from the offence under Section
138 of the Act.
3. Being aggrieved and dissatisfied with the same, the
applicant has preferred the present application seeking leave to
appeal mainly stating that the impugned judgment and order of
acquittal is bad, illegal, unjust, improper and most particularly
without appreciating the facts and circumstances of case and
evidence on the record.
4. Heard learned advocate Mr.J.L.Hajare appearing for
the applicant and learned APP Ms. Jirga Jhaveri for the respondent
- State and learned advocate Mr. H. J. Karathiya for the
respondent No.2.
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5. Learned advocate for the applicant submits that the
impugned judgment and order of acquittal is illegal, unjust,
improper and without appreciating the facts and circumstances of
the case and the evidence on record. That the ingredients and
requirements of Section 138 of the Negotiable Instrument Act are
satisfied by the applicant and the cheque was presented within its
validity period and the same has returned unpaid due to
insufficiency of funds and the statutory notice has been duly
served to the accused. That learned Trial Court ought to have
convicted the accused but has recorded the impugned judgment
and order of acquittal and as the applicant has a good case on
merits, the present leave to appeal may be allowed.
6. Learned advocate Mr.H.J.Karathiya and learned APP
Ms. Jirga Jhaveri have jointly submitted that the learned Trial
Court has considered all the evidence of the applicant and the
accused had examined two witnesses and has rebutted the
presumption successfully. The defense of the accused is that the
complainant is illegally doing business of finance and the accused
was regularly paying an amount of Rs.4500/- per month from
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20.11.2009 to 24.10.2012 and in all 29 installments were paid and an
amount of Rs.2,34,000/- was paid by RTGS on 29.01.2018 but, the
same has not been shown by the complainant in the complaint.
The learned Trial Court has appreciated all the evidence in proper
perspective and has passed the impugned judgment and order of
acquittal and no interference of this Court is required and the
present application for leave to appeal may be rejected.
7. Since this is an application seeking leave to appeal
against an order of acquittal, at this juncture, it would be fit to
refer the settled principle of law of section 118 and 139 of the N.I.
Act.
8. With regard to the facts in the present case, it would be
fit to refer to the observations made the Apex Court in Rangappa
vs Sri Mohan reported in 2010 11 SCC 441, in Para-14, 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
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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 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 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."
8.1. The Apex Court in Tedhi Singh vs Narayan Dass
Mahant reported in 2022 6 SCC 735 has observed in Para 7 as
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under:
"7. It is true that this is a case under Section 138 of the
Negotiable Instruments Act. Section 139 of the N.I. Act
provides that Court shall presume 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. This presumption, however,
is expressly made subject to the position being proved
to the contrary. In other words, it is open to the
accused to establish that there is no consideration
received. It is in the context of this provision that the
theory of 'probable defence' has grown. In an earlier
judgment, in fact, which has also been adverted to in
Basalingappa (supra), this Court notes that Section 139
of the N.I. Act is an example of reverse onus [see (2010)
11 SCC 441). It is also true that this Court has found
that the accused is not expected to discharge an unduly
high standard of proof. It is accordingly that the
principle has developed that all which the accused
needs to establish is a probable defence. As to whether
a probable defence has been established is a matter to
be decided on the facts of each case on the conspectus
of evidence and circumstances that exist"
8.2. 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:
1 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.
2 The presumption Under Section 139 is a
rebuttable presumption and the onus is on the
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Accused to raise the probable defence. The
standard of proof for rebutting the presumption
is that of preponderance of probabilities.
3 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.
4 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.
5 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."
8.3. The Apex Court in Naresh Potteries vs Aarti Industries
reported in 2025 0 INSC 1 in para 33.
"33. While holding that there is no serious conflict between
the decisions in M.M.T.C. [M.M.T.C. Ltd. v. Medchl
Chemicals and Pharma (P) Ltd., (2002) 1 SCC 234: 2002
SCC (Cri) 121] and Janki Vashdeo Bhojwani [Janki
Vashdeo Bhojwani v. IndusInd Bank Ltd., Page No. 8
of 15 (2005) 2 SCC 217], we clarify the position and
answer the questions in the following manner:
33.1. Filing of complaint petition under Section 138 of the
NI Act through power of attorney is perfectly legal
and competent.
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33.2. The power-of-attorney holder can depose and verify on
oath before the court in order to prove the contents of
the complaint. However, the power-of-attorney holder
must have witnessed the transaction as an agent of the
payee/holder in due course or possess due knowledge
regarding the said transactions.
33.3. It is required by the complainant to make specific
assertion as to the knowledge of the power-of-attorney
holder in the said transaction explicitly in the
complaint and the power-of- attorney holder who has
no knowledge regarding the transactions cannot be
examined as a witness in the case.
33.4. In the light of Section 145 of the NI Act, it is open to
the Magistrate to rely upon the verification in the form
of affidavit filed by the complainant in support of the
complaint under Section 138 of the NI Act and the
Magistrate is neither mandatorily obliged to call upon
the complainant to remain present before the Court,
nor to examine the complainant of his witness upon
oath for taking the decision whether or not to issue
process on the complaint under Section 138 of the NI
Act.
33.5. The functions under the general power of attorney
cannot be delegated to another person without specific
clause permitting the same in the power of attorney.
Nevertheless, the general power of attorney itself can
be cancelled and be given to another person."
9. In light of the above settled principles of law and
considering the arguments advanced by the learned advocates for
the parties and on perusal of the record of the case as per the case
of the applicant, an amount of Rs.3,65,000/- was given in cash and
the amount of Rs.3,00,000/- was given by Cheque No.494027 dated
6.10.2009 of "Jeevan Commercial Bank", Bhakti Nagar branch. The
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applicant has not clearly mentioned the date on which the amount
in cash was given that some amount was repaid by the accused.
During the cross-examination, the applicant has not mentioned the
date on which the accused required the amount in the complaint,
notice and examination in chief and the reason for the requirement
of the amount is also not mentioned. Moreover, the applicant has
not mentioned at which place and in whose presence the amount
was given to the accused and whether the transaction between his
father and the accused had taken place in his presence. It appears
that during the cross-examination, the applicant being the power
of attorney holder of his father has stated that he did not know the
replies to a number of questions and when the accused has
questioned the financial capacity of the applicant. It was the duty
of the applicant to produce for the documentary evidences to show
his financial capacity. Moreover, the accused had examined the
defense witness No.1 Dineshbhai Karshabhai Makwana at Exh.31
and the witness was the Joint Manager in Bank of Baroda, Mavdi
Road Branch, who has proved that the cheque in question was
from the cheque book, which was issued on 05.02.2009 and the
transaction regarding the cheque has taken place in 2009. The say
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of the accused that the cheque was given as a security and was
misused by the complainant 9 years after he had paid up the
amount is rightly appreciated by the learned Trial Court.
Moreover, the knowledge of the Power of Attorney Holder
regarding the transaction has already been discussed and the
learned Trial Court has concluded that the applicant has not come
with a clean hand before the learned Trial Court and the accused
has successfully rebutted the presumption and proved that the
entire amount has been paid with interest.
10. In light of the judgment of Rangappa (Supra) the
accused is not expected to discharge an unduly high standard of
proof and the accused has to rebut the presumption under Section
139 of the N.I.Act and the standard for doing so is that of
"preponderance of probabilities". In the instant case, the accused
has successfully rebutted the presumption and has raised a
probable defence and during the cross-examination of the
complainant has questioned his financial capacity and has also
brought on record that the complainant did not produce the
necessary documents regarding his accounts. As settled by the
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Apex Court in Basalingappa (Supra) it is not necessary for the
accused to step into the witness box to raise his defence, and his
probable defence can be drawn out from the materials of the
complainant. The applicant has during the cross examination
admitted that the accused had paid 29 installments of Rs 4500/-
each and an amount of ₹2,34,000/- by RTGS but the same is not
mentioned in the complaint, and it clearly appears that the old
cheque has been misused by the applicant. The learned Trial Court
has considered all the documents produced by the applicant. The
learned Trial Court has found that there is no legal debt due of the
applicant, and it does not appear from record that the accused had
given the said cheque to pay the legal debt. Moreover, the said
cheque was a Non C.T.S. cheque which was discontinued and no
code number was found on the left side of the said cheque. The
applicant did not come with clean hands and the case had been
filed even though the applicant had received the amount loaned
with interest from the accused. The power of attorney holder did
not have the proper knowledge about the transaction and had filed
the case with incomplete facts and the complainant has not proved
the case beyond reasonable doubts. The learned Trial court has
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appreciated all the evidence and passed the impugned judgment
and order of acquittal, which is just and proper and does not
require any interference of this Court.
11. Consequently, the present application seeking leave to
present an appeal under section 378(4) of the Code of Criminal
Procedure fails and is hereby dismissed.
12. Notice stands discharged. Record and proceedings if
any, be sent back to the learned Trial Court forthwith.
13. Since the leave to prefer appeal is rejected, no order is
required to be passed in the Criminal Appeal, which is at filing
stage and the same stands disposed accordingly.
(S. V. PINTO,J)
*F.S.KAZI.....
