Gujarat High Court
Mas Financial Services Limited Thro ... vs State Of Gujarat on 28 July, 2025
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R/CR.A/647/2019 JUDGMENT DATED: 28/07/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL APPEAL (AGAINST ACQUITTAL) NO. 647 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE S.V. PINTO Sd/-
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Approved for Reporting Yes No
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MAS FINANCIAL SERVICES LIMITED THRO UMESH R GANDHI
Versus
STATE OF GUJARAT & ANR.
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Appearance:
TIRTH NAYAK(8563) for the Appellant(s) No. 1
MR PRANAV DHAGAT, APP for the Opponent(s)/Respondent(s) No. 1
RULE SERVED for the Opponent(s)/Respondent(s) No. 2
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CORAM:HONOURABLE MS. JUSTICE S.V. PINTO
Date : 28/07/2025
ORAL JUDGMENT
1. The present appeal is filed by the appellant - original
complainant under Section 378 of the Code of Criminal Procedure,
1973 against the judgment and order of acquittal passed by the
learned Chief Judicial Magistrate, Rajkot in Criminal Case No.
12963 of 2012 on 14.12.2018,whereby the respondent No. 2 -
original accused came to be acquitted from the offence under
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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 by
executing a loan agreement. As per the loan agreement, the
accused had to pay regular installments, but the same were not
paid and the accused gave cheque No.000675 dated 04.09.2012 for
Rs.23,658/- from his account with Andhra Bank. The cheque was
deposited in the bank of the complainant for clearing, but the same
returned unpaid on 10.10.2012 with the endorsement "Insufficient
Funds". The complainant gave the statutory demand notice
through his advocate on 01.11.2012 which was duly served, but the
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accused did not repay the amount, and hence, the complainant
filed the complaint under Section 138 of the Act before the Court
of the Chief Judicial Magistrate, Rajkot which came to be
registered as Criminal Case No.12963 of 2012.
2.2 The accused was duly served with the summons and
appeared before the learned Trial Court and his plea was recorded
at Exh.10 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,
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 and did not produce any documentary
evidence on record 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 Act.
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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. Neel Vasant for learned
advocate Mr. Tirth Nayak appearing for the appellant and learned
APP Mr. Pranav Dhagat for the respondent - State. Though served
the respondent No.02 has not appeared either in person or through
an advocate. 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. Neel Vasant for learned
advocate Mr. Tirth Nayak for the appellant has taken this Court
through the entire evidence produced by the prosecution and has
vehemently argued that the learned Trial Court has not
appreciated the evidence properly and the appellant has produced
cogent evidence to prove the case and has successfully proved the
case against the respondent No.02 but the learned Trial Court has
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not considered the same and has acquitted the respondent No.02.
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
respondent No.02 guilty for the said offence. Learned Advocate
has urged this Court to allow the present appeal and impose
proper sentence on the respondent No.02.
6. Learned APP Mr. Pranav Dhagat for the respondent -
State has submitted that the learned Trial Court has appreciated all
the evidence in true perspective and has not committed any error
in acquitting the respondent No.02. 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
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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 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.
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(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 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.' "
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
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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 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 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
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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 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.
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9. In light of the above settled principles of law in
acquittal appeals the evidence of the complainant on record is
appreciated and the examination in chief of the complainant is
produced at Exh.13 wherein the complainant has stated that a loan
was taken by the accused but there is no documentary evidence on
record to show that the loan was taken by the accused. The
complainant does not know when the transaction was done and
when the cheque was given by the accused and cheque No.000675
produced at Exh.20 is nowhere mentioned in the loan documents.
In the cross examination the complainant stated that they had not
filed any complaint against the accused upto 20.06.2012 for the
loan for which the period was ending on 20.06.2006. The statement
of loan produced at Exh.19 does not show clarification of the
amount of Rs.23,658/- and it shows the balance amount of
Rs.15,473/- on 08.07.2009. The material details including the rate of
interest at which the loan was taken and the rate of penal interest
which was to be taken from the accused if the instalments were not
paid in time by the accused are not shown. The calculations of the
amounts of late interest, penal interest service charge,
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miscellaneous dealer debit etc. have not been clarified by the
complainant and the complainant had no knowledge about the
material details of transaction. The person who deposed before the
court had no personal knowledge about the loan transaction and
the complainant has not produced any original documents about
his authority to proceed with the case.
10. The observation of the Apex Court in Rangappa Vs Sri
Mohan reported in 2010 11 SCC 441 in para 14 are reproduced as
under:
"14. In light of these extracts, we are in agreement with the
respondent-claimant that the presumption mandated by Section 139 of
the Act does indeed include the existence of a legally enforceable debt
or liability. To that extent, the impugned observations in Krishna
Janardhan Bhat (supra) may not be correct. However, this does not in
any way cast doubt on the correctness of the decision in that case since
it was based on the specific facts and circumstances therein. As noted
in the citations, this is of course in the nature of a rebuttable
presumption and it is open to the accused to raise a defence wherein
the existence of a legally enforceable debt or liability can be contested.
However, there can be no doubt that there is an initial presumption
which favours the complainant. Section 139 of the Act is an example of
a reverse onus clause that has been included in furtherance of the
legislative objective of improving the credibility of negotiable
instruments. While Section 138 of the Act specifies a strong criminal
remedy in relation to the dishonour of cheques, the rebuttable
presumption under Section 139 is a device to prevent undue delay in
the course of litigation. However, it must be remembered that the
offence made punishable by Section 138 can be better described as a
regulatory offence since the bouncing of a cheque is largely in the
nature of a civil wrong whose impact is usually confined to the private
parties involved in commercial transactions. In such a scenario, the test
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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."
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.
(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.
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(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.
24. xxxx
25. xxxx
26. xxxx
27. xxxx
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. 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
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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 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 N.I.Act. This Court,
however, cautioned that an exception to the above would be when the
power-of-attorney holder 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"
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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). It has also come on record that
the accused 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 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 N.I.Act when
the cheque was dishonoured. The complainant has 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
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(supra) the authorized power of attorney can file and proceed with
the case if he has knowledge of transaction but in this case, the
recovery manager who has deposed had no personal knowledge
about the transaction and he cannot be examined as a witness.
Moreover, there is no cogent and reliable evidence to show the
legally recoverable debt of the cheque amount on the date of
issuance of the cheque.
11.1. 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
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with the impugned judgment and order and the present appeal is
devoid of merits and resultantly, the same is dismissed.
12. The impugned judgment and order of acquittal passed
by the learned Chief Judicial Magistrate, Rajkot in Criminal Case
No. 12963 of 2012 on 14.12.2018 is hereby confirmed.
13. Bail bond stands cancelled. Record and proceedings be
sent back to the concerned Trial Court forthwith.
Sd/-
(S. V. PINTO,J)
F.S. KAZI
