High Court of Gujarat
HARSHAD U KAMLEversusSTATE OF GUJARAT
- Disposal
- 39-RULE DISCHARGED/DISMISSED @ FH
- Bench
- HEMANT M PRACHCHHAK
Holding
The High Court upheld the acquittal, finding that no legally enforceable personal debt existed against Respondent No.2 and that the appellate court had correctly applied the provisions of the Negotiable Instruments Act.
Summary
The appellant, Dr. Harshad U. Kamle, alleged that Respondent No.2, a trustee of the Tapasvi Charitable Trust, issued a personal cheque of Rs.6,50,000 for loans and rent, which was dishonoured for insufficient funds. After serving a statutory notice under Section 138 of the Negotiable Instruments Act, the appellant filed a criminal complaint, leading the Trial Court to convict the respondent and impose imprisonment and a fine. The First Appellate Court reversed the conviction, holding that the liability was of the Trust, not the individual trustee, and that the presumption under Section 139 was not rebutted. The appellant appealed to the High Court, arguing that the appellate court erred in ignoring material evidence and misapplying Sections 138 and 139. The High Court examined the evidence, noted that the respondent had personally signed the cheque and that the alleged debt was not a legally enforceable personal liability, and affirmed the appellate court’s acquittal. Consequently, the appeal was dismissed and the order of acquittal confirmed.
Issues considered
- The cheque was issued to discharge a legally enforceable debt or liability under Section 138 of the Negotiable Instruments Act.
- Whether the liability for the cheque amount rested with the Trust and its trustees or with Respondent No.2 personally.
- Whether the presumption in favour of the holder under Section 139 was properly rebutted by the respondent.
- Whether the First Appellate Court erred in reversing the Trial Court’s conviction.
Legislation cited
- Code of Criminal Procedure, 1973s. 204, s. 374, s. 378, s. 386
- Negotiable Instruments Act, 1881s. 118, s. 138, s. 139, s. 141
Subjects
Negotiable Instruments ActSection 138Cheque dishonourTrust liabilityAcquittalCriminal appealPresumption under Section 139Burden of proofCriminal Procedure
Judgment
R/CR.A/1398/2011 JUDGMENT DATED: 07/08/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL APPEAL NO. 1398 of 2011
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK Sd/-
================================================================
Approved for Reporting Yes No
୰
================================================================
HARSHAD U KAMLE
Versus
STATE OF GUJARAT & ANR.
================================================================
Appearance:
MR HRIDAY BUCH(2372) for the Appellant(s) No. 1
ADVOCATE NOTICE SERVED for the Opponent(s)/Respondent(s) No. 2
MR RASESH H PARIKH(3862) for the Opponent(s)/Respondent(s) No. 2
MR.HEMANG H PARIKH(2628) for the Opponent(s)/Respondent(s) No. 2
MS JIRGA JHAVERI ADDITIONAL PUBLIC PROSECUTOR for the
Opponent(s)/Respondent(s) No. 1
================================================================
CORAM:HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
Date : 07/08/2026
JUDGMENT
1. The appellant-original complainant has preferred this
appeal under Section 378 of the Code of Criminal Procedure,
1973 against the judgment and order of acquittal dated
08.06.2011 passed by the learned Principal Sessions Judge,
Rajkot (hereinafter be referred to as “the First Appellate
Court”) in Sessions Case No.149 of 2009 whereby the First
Appellate Court has quashed and set aside the order dated
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18.08.2009 passed in Criminal Case No.4509 of 2006 below
Exh.58 by learned 5th Additional Senior Civil Judge and
Judicial Magistrate First Class, Nadiad (hereinafter be
referred to as “the Trial Court”) and acquitted the respondent
accused from the charges under Section 138 of the Negotiable
Instruments Act (hereinafter be referred to as the “N.I.
Act”) .
2. Brief Facts Giving Rise to the Present Appeal are that
Respondent No. 2 was managing the affairs of a trust, namely
Tapsvi Charitable Trust, as its trustee. For the purpose of
running the affairs of the Trust, Respondent No. 2 required a
premises and, therefore, took a portion of the appellant's
hospital property on rent. Respondent No. 2 was liable to pay
rent for the said premises.
2.1 Respondent No. 2 also borrowed amounts of Rs. 50,000/-,
Rs. 2,00,000/-, and Rs. 50,000/- from the appellant, and Rs.
2,00,000/- from the appellant's wife, for the proper
management of the Trust and for carrying out its various
activities. Besides the said loans, rent amounting to
Rs. 1,50,000/- was also payable by Respondent No. 2. Despite
repeated demands, Respondent No. 2 failed to repay the
amounts due. Upon persistent insistence by the appellant,
Respondent No. 2 acknowledged her liability and executed a
promissory note and a written undertaking agreeing to repay
the outstanding amount.
2.2 As neither the Trust nor Respondent No. 2 repaid the
outstanding dues for a considerable period, Respondent No. 2,
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in acknowledgment of her personal liability, issued Cheque
No. 235630 dated 01.06.2006, drawn on Bank of Baroda,
Kothi Branch, Vadodara, for a sum of Rs. 6,50,000/- in favour
of the appellant. The appellant presented the said cheque for
encashment through his account maintained with Central
Bank of India, Petlad Road Branch, Nadiad. However, the
cheque was dishonoured and returned unpaid with the
endorsement "Insufficient Funds."
2.3 Consequently, the appellant, through his Advocate, issued
a statutory legal notice dated 28.06.2006, calling upon
Respondent No. 2 to make payment of the cheque amount
within the prescribed period, failing which proceedings under
Section 138 of the Negotiable Instruments Act would be
initiated.
2.4 The said notice was served upon Respondent No. 2 on
02.07.2006. In reply, Respondent No. 2 denied the contents of
the notice. Although she did not dispute the issuance of the
cheque, she denied the existence of any legally enforceable
debt or liability.
2.5 As Respondent No. 2 failed to make payment despite
service of the statutory notice, the appellant was constrained
to initiate proceedings under Section 138 of the Negotiable
Instruments Act by filing a complaint on 11.08.2006 before
the learned Judicial Magistrate First Class, Nadiad.
2.6 Process was issued under Section 204 of the Code of
Criminal Procedure, 1973. Respondent No. 2 appeared before
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the trial Court and pleaded not guilty, whereupon the trial
commenced.
2.7 To prove his case the appellant has examined one witness
namely Dr. Harshad U. Kamli – complainant at Exh.9 and led
following documentary evidence:-
Sr. Exhibit Description of Document
No. No.
1 14 Cheque No. 235630 dated 01/06/2006 for Rs.6,50,000/-
issued by the accused to the complainant
2 15 Original Bank Return Memo showing the reason for
dishonor of cheque
3 16 Letter/Intimation issued by Central Bank of India to the
complainant regarding the return of cheque
4 17 Office copy of the notice issued to the accused
5 18 Original Registered A.D. receipt signed by the accused
acknowledging receipt of the notice issued
6 19 U.P.C. Certificate
7 20 Original reply to the notice issued to the accused
8 21 Settlement Agreement
9 23 Letter dated 08/05/2005 written to the accused by the
complainant and Dr. Vijaykumar Patel
2.8 Upon completion of the oral and documentary evidence,
the appellant filed a closing purshis at Exhibit-43. Respondent
No. 2 did not enter the witness box or adduce any oral
evidence in her defence. She only furnished her statement
under Section 313 of the Code of Cr. P.C.
2.9 After hearing both the parties and after evaluating the
evidence placed on record the trial Court vide order dated
18.8.2009 convicted the respondent accused for the offence
punishable under Section 138 of the N.I. Act and imposed
simple imprisonment for a period of 3 months and fine of
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Rs.1000/- and in default 30 days simple imprisonment.
Further the Trial Court has also directed the accused to pay
Rs.6,50,000/- to the the present appellant.
2.10 Being aggrieved and dissatisfied with the aforesaid order
of Trial Court, the accused approached First Appellate Court
by filing Criminal Appeal No.71 of 2009 below Exh.29 wherein
the First Appellate Court has quashed and set aside the order
dated 18.08.2009 passed by the Trial Court and acquitted the
respondent accused from the charges under Section 138 of
N.I. Act.
2.11 Being aggrieved and dissatisfied with the order of
acquittal passed by the First Appellate Court, the original
complainant has filed present appeal.
3. Heard Mr. Hriday Buch, learned counsel for the
appellant, Mr. Hemang Parikh, learned counsel for
respondent No.2 and Ms. Jirga Jhaveri, learned APP for the
State of Gujarat.
4. Mr. Buch, learned counsel for the appellant, has taken this
Court through the judgments and orders of the Trial Court
and the First Appellate Court. In the wake of his submissions,
he contends that the learned Judge of the Appellate Court
committed a serious error of law and fact by passing the
impugned judgment and order of acquittal, thereby reversing
the findings recorded by the Trial Court without providing any
cogent reasons and without identifying any illegality in the
Trial Court's judgment.
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4.1 Mr. Buch, learned counsel for the appellant has submitted
that the Trial Court, after properly appreciating the
documentary evidence produced before it, rightly held the
respondent guilty of the offense under Section 138 of the
Negotiable Instruments (N.I.) Act and held the respondent
liable to pay compensation of Rs. 6,50,000/-.
4.2 Mr. Buch, learned counsel for the appellant has submitted
that the First Appellate Court has misapplied the law and
ignored material evidence, thereby rendering the order
perverse and unsustainable. The First Appellate Court failed
to appreciate that the respondent No.2 did not discharge the
statutory burden under Section 139 of the Act. He has
submitted that her signature on the cheque and its contents
were never disputed. Even in her reply to the statutory notice,
no categorical denial was made. Vague averments cannot
rebut the statutory presumption. Dishonest conduct from
inception disentitles respondent No.2 from any discretionary
relief.
4.3 Mr. Buch, learned counsel for the appellant has submitted
that the First Appellate Court erred in holding that the
liability was of the trust and hence trustees ought to have
been joined as accused. He has submitted that the appellant's
case consistently was that respondent No.2 accepted the
trust's liability personally and issued the cheque in her
individual capacity. Hence, joining of the trust or trustees as
parties was unnecessary. The contrary finding is wholly
erroneous. Learned counsel for the appellant has relied upon
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the decision passed by The Hon'ble Supreme Court, in case of
Sankar Padam Thapa Versus Vijaykumar Dineshchandra
Agarwal 2025(0) AIJEL-SC 75982" wherein it is held that
"If in a trust, complaint is against trustee and when a cause of
action arises due to an alleged dishonor of cheque and a
complaint is initiated under NI Act, the same is maintainable
against Trustee who has signed cheque, without requirement
to array Trust also as an accused."
4.4 Mr. Buch, learned counsel for the appellant has submitted
that the First Appellate Court concludes that dues were not
personal dues of respondent and that since the trust/other
trustees are not joined as party, benefit is extended to
accused person. The said view is in complete contradiction
with the view taken by the Hon'ble Supreme court in the case
of Bijoy Kumar Moni Versus Paresh Manna Criminal
Appeal No.556 of 2024 2024 AIJEL SC 74454 more
particularly para 52 of the said judgement.
4.5 Mr. Buch, learned counsel for the appellant has submitted
that Section 138 NI Act clearly provides that dishonor of a
cheque issued towards discharge of any legally enforceable
debt or liability constitutes an offence. He has submitted that
Respondent No.2 admitted the dues of the trust and accepted
liability personally. Issuance of cheque in her name squarely
attracts Section 138.
4.6 Mr. Buch, learned counsel for the appellant has submitted
that the First Appellate Court wrongly held that the appellant
failed to examine his wife Sashiben or prove her capacity to
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lend Rs. 2 lakhs. The appellant's evidence clearly established
that Sashiben was employed as Laboratory Assistant, earning
salary, and lent the amount from her savings. The finding is
contrary to record and perverse.
4.7 Mr. Buch, learned counsel for the appellant has submitted
that the First Appellate Court wrongly cast the burden upon
the appellant to prove written documentation of the loan.
Under Sections 138 and 139 NI Act, presumption operates in
favour of the holder of the cheque. It was for respondent No.2
to rebut the presumption, which she failed to do. The finding
that no loan was advanced is based on conjecture and
contrary to statutory scheme.
4.8 Mr. Buch, learned counsel for the appellant has submitted
that the First Appellate Court's discussion on rent receipts
and income tax returns is misplaced. Non-production of
returns does not render the appellant's case doubtful.
Occupation of hospital premises by respondent No.2 is
undisputed. No positive evidence of rent payment was
produced by respondent No.2. Hence, adverse inference
against appellant is unjustified.
4.9 Mr. Buch, learned counsel for the appellant has submitted
that the First Appellate Court have misread the agreement
(Samadhan Karar) dated 16.03.2005 (Exh.21) and have also
misread the "Bahedhari Patra" (Exh.41) (Guarantee Letter),
which shows the liability of the respondent No.2 toward the
appellant herein. The documents clearly records dues of
respondent No.2. The contrary finding is based
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misinterpretation and is erroneous. The First Appellate Court
erred in holding that respondent No.2 did not accept liability
in her individual capacity. He has submitted that the oral and
documentary evidence of appellant was ignored. Respondent
No.2 neither examined herself nor produced any evidence.
Hence, appellant's evidence ought to have been accepted.
4.10 Mr. Buch, learned counsel for the appellant has
submitted that the Learned Session court ought not to have
overlooked exhibited document at Exh.41. The existence of
the said exhibited document is completely ignored by the First
Appellate Court. The said document goes to the root and
proves beyond all reasonable doubt with no other possible
view except the guilt of the Respondent accused.
4.11 Mr. Buch, learned counsel for the appellant has
submitted that the impugned judgment and order passed by
the First Appellate Court is illegal, perverse, and contrary to
the evidence on record, the provisions of the Negotiable
Instruments Act, and the settled principles of law. He has
submitted that the First Appellate Court failed to appreciate
that respondent No.2 did not rebut the statutory presumption
under Section 139 of the Act. Her signature on the cheque
and its contents were never disputed, and even her reply to
the statutory notice contained no specific denial.
4.12 Mr. Buch, learned counsel for the appellant has
submitted that the First Appellate Court erred in holding that
the Trust and its trustees ought to have been impleaded. He
has submitted that the appellant consistently pleaded that
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respondent No.2 personally accepted the Trust's liability and
issued the cheque in her individual capacity. Hence, the
complaint was maintainable against her alone under Section
138 of the Act.
4.13 Mr. Buch, learned counsel for the appellant has
submitted that the First Appellate Court misapplied Sections
138 and 139 of the Act by casting the burden on the appellant
instead of requiring respondent No.2 to rebut the statutory
presumption. The finding that no legally enforceable liability
existed is contrary to law.
4.14 Mr. Buch, learned counsel for the appellant has
submitted that the finding that the appellant failed to prove
the loan of Rs.2,00,000/- is erroneous. The appellant's
evidence established that his wife, Sashiben, was employed as
a Laboratory Assistant, had independent earnings, and
advanced the amount from her savings.
4.15 Mr. Buch, learned counsel for the appellant has
submitted that the First Appellate Court wrongly insisted
upon written proof of the loan. In the absence of rebuttal
evidence from respondent No.2, the statutory presumption
under Section 139 remained unrebutted.
4.16 Mr. Buch, learned counsel for the appellant has
submitted that the First Appellate Court misread the
documentary evidence, particularly the Samadhan Karar
(Exh.21) and Bahedhari Patra (Exh.41), which clearly
establish respondent No.2's liability. The contrary findings are
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based on misinterpretation of the record.
4.17 Mr. Buch, learned counsel for the appellant has
submitted that the First Appellate Court exceeded its
appellate jurisdiction under Sections 374 and 386 of the Code
by reversing the well-reasoned judgment of conviction passed
by the Learned Magistrate without any valid legal basis.
4.18 Mr. Buch, learned counsel for the appellant has
submitted that the impugned judgment and order of acquittal
being illegal, perverse, contrary to law and evidence, deserves
to be quashed and set aside, and the judgment of conviction
passed by the Trial Court deserves to be restored.
4.19 Mr. Buch, learned counsel for the appellant has referred
and relied upon the following decisions:-
1. Sankar Padam Thapa Versus Vijaykumar
Dineshchandra Agarwal (supra)
2. Bijoy Kumar Moni Versus Paresh Manna (supra)
5. On the other hand, Mr. Hemant Parikh, learned counsel
for the respondent-accused, has submitted that the appellant
(original complainant) failed to prove that the respondent was
guilty under Section 138 of the N.I. Act. He contends that the
appellant failed to establish the existence of any legally
enforceable debt owed by the respondent for which the
cheque of Rs. 6,50,000/- was allegedly issued in favor of the
appellant.
5.1 Mr. Parikh, learned counsel for the respondent accused
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has submitted that the Trial Court failed to appreciate the
documentary evidence produced before it in its true and
proper spirit, and thus the conviction recorded by the Trial
Court against the respondent was bad in law. Consequently,
the First Appellate Court rightly passed the impugned
judgment and order of acquittal in favor of the respondent,
which is just and proper.
5.2 Mr. Parikh, learned counsel has submitted that since the
present appeal is against an order of acquittal, no
interference is warranted by this Court unless grave illegality
or perversity is established in the impugned judgment of the
First Appellate Court.
5.3 Mr. Parikh, learned counsel for the respondent has
submitted that there is no perversity or illegality committed
by the First Appellate Court in passing the Judgment in
Criminal Appeal No. 71 of 2009 whereby the Order passed by
the Ld. Trial Court is quashed and set aside and acquitted
Respondent No.2. He has submitted that First Appellate Court
had not committed any error in appreciating the oral as well
as documentary evidence produced in the Criminal Case No.
4509 of 2006. He has submitted that the First Appellate Court
had appreciated the evidence in its true and letter spirit and
also followed the Judgments declared by this Hon'ble Court as
well as by the Hon'ble Apex Court. He has submitted that the
Complainant had failed to prove that Rs.6,50,000/- was due
and payable by the Respondent No.2 and towards the said
debt, that he had received a cheque on 01.06.2006. He has
submitted that the First Appellate Court had considered the
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fact that as per the Agreement below Exh. 21, the
Complainant and 02 other persons became the Trustees of the
Trust and they are administering the Trust.
5.4 Mr. Parikh, learned counsel for the respondent has
submitted the Appellant / Complainant had failed to prove and
establish his case whereby the necessary ingredients under
Section 138 of the NI Act, 1881 are satisfied that the cheque
amount of Rs.6,50,000/- is for legal enforceable debt against
the Respondent No.2. He has submitted that the First
Appellate Court rightly appreciated the fact that Complainant
had to prove his case for demand of legal enforceable debt,
not produced any account book or examine any independent
witness like Vijaykumar A. Patel, Shashikalaben who is a wife
of Complainant. He has submitted that the First Appellate
Court had also considered the fact that Complainant had
neither produced nor examined the best evidence before the
Ld. Trial Court to prove his case that Complainant is a
creditor / liable to recover the cheque amount from the
Respondent No.2. He has submitted that the appellant has not
examined his wife who is a Trustee of the Trust and also not
authorized the appellant to recover the amount from
Respondent No.2.
5.5 Mr. Parikh, learned counsel for the respondent has
submitted that the complainant who is a Doctor who is filing
an income tax returns and such an amount of Rs.50,000,
2,00,000/- and 50,000 in cash has not been shown in his
account book towards the debt of the Respondent No.2. He
has submitted that First Appellate Court has also rightly
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appreciated the fact that in all Rs.3,00,000/- has been given in
cash as per demand of the complainant in the notice under
Section 138 of the NI act, 1881 and the document below Exh.
21 complainant has to take Rs.50,000/- therefore, there is a
material contradiction in the contention raised by the
complainant in oral as well as in documentary evidence.
Therefore, there is no perversity and illegality committed by
the First Appellate Court in the impugned judgement and
therefore, the same may be upheld.
5.6 Mr. Parikh, learned counsel for the respondent has
submitted the Court had while framing the Issue No. 1 not
taken into consideration Exh. 20 – Reply to the notice wherein
from the beginning the Respondent No.2 had disputed the
cheque and the amount of cheque. Therefore, the
Complainant has no benefit of presumption under Section 139
of the NI Act, 1881 cheque was issued towards consideration.
Therefore, complainant had failed to prove legal enforceable
debt. (refer cross examination of complainant). The said fact is
admitted.
5.7 Mr. Parikh, learned counsel for the respondent has
submitted that the Complainant had summarily failed to prove
his case that he is in holder in due course of the cheque of
Rs.6,50,000/- from the Respondent No.2. The Complainant
had in his notice, demanded the cheque amount on the
following heads :-
Rs. 50,000/- Cash given by Complainant (no date)
Rs.2,00,000/- Cash given by Complainant (no date)
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Rs. 50,000/- Cash given by Complainant (no date)
Rs.2,00,000/- Shashiben Kamle wife of Complainant
(no date)
Rs.1,50,000/- Towards the arrears of rent.
5.8 Mr. Parikh, learned counsel for the respondent has
submitted the above mentioned facts have been demanded
and pleaded in the notice which has been denied and disputed
by the Respondent No.2 in her reply to the notice below Exh.
20 from beginning. He has also submitted that the
Complainant had not disputed the fact that his wife Shashiben
Kamle was the Trustee of the Trust and she is administering
the Trust. He has submitted that the Complainant had
produced below Exh. 26 to 37, the rent receipts issued by him
and sanctioned by Dr. Vijaykumar A. Patel as the Complainant
had contended that an amount of Rs.1,50,000/- towards the
arrears of rent has not been received. He ha submitted that
the Complainant had made a false statement and though he
had received the amount of rent, before the Ld. Trial Court,
he had pleaded and deposed that he had not received the
amount of rent. The Complainant had admitted that as per the
Exh. 21, since 01.02.2005, Complainant was in charge of the
Trust and its affairs and for the month of February – 2005 and
March – 2005, rent have been paid and for that rent receipts
are issued by complainant. He has submitted that under the
circumstance, it cannot be believed that the Complainant had
not received the amount towards the rent. Complainant had
admitted fact no recovery of notice was issued. (reference-
cross examination). He has submitted that the Complainant
had also admitted in his cross examination that Accused had
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not paid rent of 15 months and for that he had not issued any
notice for recovery of the said amount. The amount of rent is
to be recovered from the Trust and not from the Respondent
No.2. The Trial Court had summarily failed in appreciating the
oral evidence of the Complainant and therefore, the First
Appellate Court had appreciated the said evidence in letter
and true spirit. Therefore, impugned judgement is in
consonance of settled law of appreciation of evidence.
5.9 Mr. Parikh, learned counsel for the respondent has
submitted the Ld. Trial Court had failed to consider the
fact that since, 01.02.2005, the Respondent No.2 is not
in affairs of the Trust and she is not a Trustee. There is
no occasion for her to issue a cheque on 01.06.2006
towards the arrears of amount of cheque. The First
Appellate court had rightly appreciated facts and
circumstance. The First Appellate Court had rightly
appreciated the documentary evidence and the oral
evidence and conduct of the Complainant and set aside
the order of the Ld. Trial Court. He has submitted that
the controversy raised by the Complainant under the NI
Act is to be proved by documentary evidence. The
cheque has been issued towards the liability or debt.
Once the Accused disputes the amount of cheque, in that
circumstances, the Complainant has to prove the cheque
amount by producing cogent evidence like Account
Books wherein the Accused has been shown as debtor.
In the present case, the Complainant has not produced
any Account Books or ITR which shows that the Accused
is the debtor of Rs.6,50,000/- in the Account Books.
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5.10 Mr. Parikh, learned counsel for the respondent
relies upon the cross examination of Complainant at Exh.
9 wherein he had admitted that in his Account Books, he
has not shown that the Respondent No.2 is a debtor
though he maintains the Account Books. He has
submitted that the Complainant had not produced any
Account Books to show that he had given total
Rs.3,00,000/- in cash to Respondent No.2.
5.11 Mr. Parikh, learned counsel for the respondent has
submitted that as the Respondent No.2 was not a
Trustee pursuant to the Agreement dated 01.02.2005,
Dr. Vijaykumar A. Patel and Complainant had written a
letter on 08.05.2005 to the Respondent No.2 stating that
the signature of the Respondent No.2 may be deleted
from the Bank record. From on record proves that
Respondent No.2 was not in charge of trust and
complaint and other trustees are in charge and
administering trust.
5.12 Mr. Parikh, learned counsel for the respondent has
submitted that the complainant has produced the
document at Exh.21 wherein it has been mentioned the
amount of payment and the said liability has been
accepted by the Complainant and other Trustees.
Perusal of the said document, it has not been mentioned
that Rs.6,50,000/- are outstanding and has to be paid.
The Complainant has not proved the said document.
5.13 Mr. Parikh, learned counsel for the respondent has
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submitted that as per the evidence on record, it clearly
proves that complainant had made a false and frivolous
case against the respondent and hence and the present
appeal may be dismissed.
5.14 Mr. Parikh, learned counsel for the respondent has
referred and relied upon the decision of this Court in the case
of Nitin Vrujlal Kakkad vs. State of Gujarat and another
dated 4.11.2025 in Criminal Appeal No.35 of 2012 and he
emphasized he relied upon paragraph Nos. 10 and 11 which
read as under:-
“10. At this juncture, it would be fit to reproduce the provisions of
section 118 and section 139 of the Negotiable Instruments Act
which read as under.
“118 - Presumptions as to Negotiable Instruments:- Until the
contrary is proved, the following presumptions shall be made:
—
(a) of consideration—that every negotiable instrument was
made or drawn for consideration, and that every such
instrument, when it has been accepted, indorsed, negotiated
or transferred, was accepted, indorsed, negotiated or
transferred for consideration;
(b) as to date—that every negotiable instrument bearing a
date was made or drawn on such date;
(c) as to time of acceptance—that every bill of exchange was
accepted within a reasonable time after its date and before
its maturity;
(d) as to time of transfer—that every transfer of a negotiable
instrument was made before its maturity;
(e) as to order of indorsement—that the indorsements
appearing upon a negotiable instrument were made in the
order in which they appear thereon;
(f) as to stamp—that a lost promissory note, bill of exchange
or cheque was duly stamped;
(g) that the holder of a negotiable instrument is a holder in
due course:
Provided that, where the instrument has been obtained from
its lawful owner, or from any person in lawful custody
thereof, by means of an offence or fraud, or has been
obtained from the maker or acceptor thereof by means of an
offence or fraud, or for unlawful consideration, the burden of
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proving that the holder is a holder in due course lies upon
him.”
139 – Presumption in favour of holder :- It shall be presumed,
unless the contrary is proved, that the holder of a cheque received
the cheque of the nature referred to in Section 138 for the
discharge, in whole or in part, of any debt or other liability.”
11. It is pertinent to note that section 138 of the N.I.Act stipulates
that to constitute an offence under the Act, the complainant must
prove that the cheque was issued by the accused in discharge of a
legally enforceable debt or any other liability and the cheque was
presented into the bank and it was returned unpaid on account of
insufficiency of funds or because it exceeded the amount arranged
to be paid by the drawer of the cheque by an agreement with the
bank. The accused thereafter must have failed to pay the amount of
cheque within 15 days of receipt of the statutory notice and the
presumption as enumerated in section 139 of the N.I.Act is
rebuttable in nature. The complainant is to prove that the cheque
was issued for a legally enforceable debt and the legally
enforceable debt must be in existence on the date when the cheque
was issued and the drawing of the cheque in discharge of the
existing or past liability is a sine qua non for bringing an offence
under section 138 of the N.I.Act.”
5.15 Mr. Parikh, learned counsel for the respondent has also
referred and relied upon the decision of the Hon’ble Apex
Court in the case of Babubhai Ambalal Patel vs. State of
Gujarat reported in 2023(0) AIJEL-HC249100 and more
particularly paragraph Nos. 8 and 12 which read as under:-
“8. The Negotiable Instruments Act including the cheque carries
presumption of consideration as provided under Sections 118(a)
and
139 of the Act, which reads as under:
Section 118 in The Negotiable Instruments Act, 1881 118.
Presumptions as to negotiable instruments. —Until the contrary is
proved, the following presumptions shall be made:—
(a) of consideration —that every negotiable instrument was made
or drawn for consideration, and that every such instrument, when
it has been accepted, indorsed, negotiated or transferred, was
accepted, indorsed, negotiated or transferred for consideration;
Section 139 in The Negotiable Instruments Act, 1881
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139. Presumption in favour of holder.—It shall be presumed, unless
the contrary is proved, that the holder of a cheque received the
cheque of the nature referred to in section 138 for the discharge,
in whole or in part, of any debt or other liability.
12. It has transpired in evidence of the witness namely
Hasmukhbhai Jashubhai Patel, who is the Bank Manager of the
concerned Bank, that the letter dated 04.05.2006 was addressed by
the accused to the concerned bank about cheque being lost.
Though the statutory presumption under Sections 118 (a) and 139
of the Act, is available in favour of the complainant, the burden was
upon the accused. However, with specific defence of loss of
cheque, the presumption drawn in favour of the complainant , in
my opinion, stood rebutted. At one stage, in the cross-examination
of the Bank Manager who has entered the witness box, has
admitted that the details entered in the cheque and the signature
put in the disputed cheuqe varies. So far as the submissions made
by learned advocate for the appellant with regard to shifting of the
burden to establish the case beyond reasonable doubt by the
complainant is concerned, the Court finds support from the
decision of the Hon’ble Supreme Court in the case of Tedhi Singh
(supra) as relied upon by learned advocate for the appellant. The
relevant observations of the aforesaid decision, has reproduced as
under:
“9. The Trial Court and the First Appellate Court have noted
that in the case under Section 138 of the N. I. Act the
complainant need not show in the first instance that he had
the capacity. The proceedings under Section 138 of the N. I.
Act is not a civil suit. At the time, when the complainant
gives his evidence, unless a case is set up in the reply notice
to the statutory notice sent, that the complainant did not
have the wherewithal, it cannot be expected of the
complainant to initially lead evidence to show that he had
the financial capacity. To that extent the Courts in our view
were right in holding on those lines. However, the accused
has the right to demonstrate that the complainant in a
particular case did not have the capacity and therefore, the
case of the accused is acceptable which he can do by
producing independent materials, namely, by examining his
witnesses and producing documents. It is also open to him to
establish the very same aspect by pointing to the materials
produced by the complainant himself. He can further, more
importantly, achieve this result through the cross
examination of the witnesses of the complainant. Ultimately,
it becomes the duty of the Courts to consider carefully and
appreciate the totality of the evidence and then come to a
conclusion whether in the given case, the accused has shown
that the case of the complainant is in peril for the reason
that the accused has established a probable defence.”
5.16 Over and above the above cited decisions, Mr.
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Parikh, learned counsel for the respondent has also
referred and relied upon the following decisions:-
1. B. Krishna Reddy vs. Syed Hafeez (Died) Per Legal
Representative Naseema Begum and another reported in
(2020) 17 SCC 488.
2. Nalinbhai H Vyas Food Inspector vs. Kishorbhai
Ghelaram Khushlani For Paris Confectionary Works
reported in 2024 AIJEL-HC 249388 – Parameters (2007)
4 SCC 415 followed and same is followed in 2009 (0)
AIJEL-HC 222261 by appellate court.
3. Rajco Steel Enterprises vs. Kavita Saraff and another
reported in (2024) 9 SCC 390
4. Sureshchandra Chandrashankar Joshi vs. State of
Gujarat reported in 2010 (1) GLH 271
5. Shanku Concretes Private Limited vs. State of Gujarat
reported in 2000 (2) GLR 1705
6. Chandrappa and others vs. State of Karnataka reported
in (2007) 4 SCC 415
7. Reverend Mother Mary Kutty vs. Reni C. Kottaram and
another reported in (2013) 1 SCC 327.
8. Pukharaj Achaldas (The Proprietor of the Firm) vs.
Kantilal Bhimraj Shah (Proprietor of Firm) reported in
2021(0) AIJEL.HC 243542
6. Upon hearing learned counsel appearing for both the sides
and on perusal of the impugned judgment and order of
acquittal passed by the First Appellate Court and the
conviction order passed by the Trial Court and upon close
examination of the depositions of the witnesses recorded by
the First Appellate Court, the issues that arise for
determination by this Court are as below:
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Whether the First Appellate Court was right and justified
in reversing the judgment rendered by the Trial Court in
the facts of the present case;
Whether the First Appellate Court while reversing the
impugned judgment and order of the Trial Court has
committed any illegality or any perversity;
Whether the First Appellate Court failed to appreciate
the reasoning recorded by the Trial Court while
recording the conviction against the present respondent;
Whether the impugned judgment passed by the First
Appellate Court suffers from any illegality or any
perversity;
7. Now, in light of the above-mentioned issue, the facts of
the case are required to be looked into that the present
respondent was the Managing Trustee of Tapasvi Charitable
Trust, which was established in the year 2000 with several
trustees for the purpose of running a de-addiction centre. The
Trust was functioning through public donations and
government grants. The de-addiction centre was being
operated from the premises known as Mamta Hospital, which
is owned by the present appellant. Initially, the Trust was
functioning smoothly under the administration of the present
respondent with the assistance of the other trustees.
However, over a period of time, the financial condition of the
Trust deteriorated. Consequently, it was decided to induct
new trustees into the Trust with a view to strengthening its
administration and financial management.
8. Thereafter, owing to his ill health, the present
respondent handed over the administration of the Trust to the
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other trustees, namely, the wife of the present appellant,
along with two other trustees, namely Mr. Vijay Kumar Patel
and Mr. Manoj B. Rao. Thereafter, in the year 2005, the
present appellant, along with Mr. Vijay Kumar Patel and Mr.
Manoj B. Rao, executed a Memorandum of Understanding,
which is produced at Exhibit 21. The said Memorandum of
Understanding, inter alia, records as under:
“MEMORANDUM OF UNDERSTANDING
We, the undersigned Managing Trustee of Tapasvi Seva Charitable
Trust, Nadiad, and the parties of Jagrut Vyasan Mukti Hospital…
First (1) Smt. Janvikaben Harishbhai Purohit
Party: 107, Krishna Township, Vaniyavad, Nadiad
Second (1) Dr. Harshadbhai Y. Kamle
Party: Mamta Hospital, Nadiad.
(2) Dr. Vijaykumar A. Patel
14, Jalaramdeep Society, Kapadvanj Road,
Nadiad.
(3) Manojbhai B. Rao, Nadiad
We, both parties, through a mutual understanding on 01/02/2005,
in accordance with Resolution No. 24 of the trust meeting, have
appointed you, the Second Party for the overall administration and
management of Jagrut Vyasan Mukti Hospital, run by Tapasvi Seva
Charitable Trust. This appointment is made subject to the following
conditions, which are binding, accepted, and approved by both
parties.
(i) Jagrut Vyasan Mukti Hospital, run by Tapasvi Seva Charitable
Trust, shall be considered a separate unit. All government aid,
public donations, and funds generated through other means
received for it, as well as the entire management, administration,
and bank financial transactions, shall be carried out by the Second
Party.
(ii) The Second Party has accepted the following financial
liabilities. Payments shall be made from government aid received
hereafter as well as from remaining past grant balances:
(a) 1,50,000 Rent (a) 1,50,000
(b) 50,000 To Dr. Kamle (towards (b) 50,000
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personal loan taken by
First Party)
(c) 2,00,000 To Sashiben Kamle (c) 2,00,000
(d) 3,50,000 To Raghubhai Patel (d) 3,50,000
(e) 2,70,000 To Dr. Vijaybhai Patel (e) 2,70,000
(f) 2,30,000 To Manojbhai Rao (f) 2,30,000
12,50,000 Twelve Lakh Fifty 12,50,000
Thousand Rupees
(iii) Other than those specified above, the Second Party shall have
no other financial liability. Any financial, social, or other liabilities
related to the trust or hospital prior to 01/02/2005 shall not be the
responsibility of Party-2.
(iv) Independent authority for the management and administration
of Jagrut Vyasan Mukti Center (Hospital) is granted to Party-2 from
01/02/2005 onwards.
(v) Necessary proceedings shall be initiated in the Charity
Commissioner's office to appoint the Second Party members as
honorary members of the Tapasvi Seva Charitable Trust.
(vi) Out of clause (illegible), Rs. 30,000/- shall be treated as
common expenses upon receipt of the grant and accounted for
accordingly.
(vii) All the above liabilities will be accepted upon receipt of the
grant. This agreement is executed while the hospital’s current
grant is active, and no instructions have been received from the
government to close the hospital to date. Full cooperation shall be
provided to secure the hospital grant. Audit has been conducted
recently and the hospital must continue operating as per the
instructions (as per manual).
The above facts and (illegible) have been agreed upon with
everyone's consent, which shall remain binding upon all.
(1) Sd/- Sd/-
(2) Sd/- 16/03/2005”
(3) Sd/-
9. After the execution of the aforesaid Memorandum of
Understanding, the responsibility for running the Trust and
bearing its day-to-day expenses, including payment of rent
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and other liabilities, was transferred to the newly inducted
trustees, who were the parties of the Second Part under the
Memorandum of Understanding. The said Memorandum of
Understanding came into force with effect from 01.02.2005.
10. Pursuant to the said Memorandum of Understanding, a
letter issued by Jagrut Vyasan Mukti Hospital, which was
being run by the present respondent through Tapasvi
Charitable Trust, is produced at Exhibit 23. By the said letter,
Mr. Vijay A. Patel, the addressee/assignee thereof, informed
the present respondent that the newly inducted trustees had
already assumed the responsibility of managing the Trust and
the de-addiction centre. It was further stated that, for the
purpose of day-to-day administration, they were required to
sign various documents, including cheques and other financial
instruments. However, as the present respondent continued to
be the authorised signatory in the bank records, the
respondent was requested to issue a consent letter
authorising the said assignee to operate the bank account and
sign the relevant documents on behalf of the Trust.
11. The said letter is produced at Exhibit 23, at page 129 of
the paper book, and reads as under:
“C.C. NO. 4509/06
Exhibit No. : 23
Signature : Illegible
Judi. First Class
JAGRUT VYASAN MUKTI HOSPITAL
(Unit of Tapasvi Seva Charitable Trust Regd. No. E/5541/ Kheda)
Funded by Min. of Social Justice & Empowerment, Govt. of India.
Hospital Address: Mamta Hospital Building, Nana Kumbhnath
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Road, Nadiad - 387001
Email : tsctd1@ncdap.org, Ph 0268-3091309 (Hosp.) 0268-2527166
Ref No:
Date: 08/05/2005
Dr. Vijaykumar Patel
Dr. H. U. Kamle
To,
Smt. Janvikaben
Managing Trustee
Subject: Regarding handing over independent financial
management for bank transactions in Jagrut Vyasan Mukti
Hospital Account No. 50038.
Respected Madam,
It is respectfully submitted that, we have undertaken the
guarantee to run the hospital along with the responsibility of
paying expenses at the hospital. However, we are unable to handle
the financial administration independently without your signature.
Therefore, it is requested you to cancel your mandatory signature
requirement and grant us independent financial management in
writing, so that bank transactions and other work can proceed
smoothly.
Yours faithfully,
1. Signature : Illegible
2. Signature : Illegible”
12. Thereafter, the newly inducted trustees addressed a letter
dated 13.07.2005 to the Manager, State Bank of India, Saloon
Bazaar Branch, Nadiad, which is produced at Exhibit 24. By
the said letter, they informed the Bank that they intended to
withdraw certain amounts from the Trust's current account to
meet its day-to-day administrative and operational expenses.
Similarly, another letter dated 10.06.2005, produced at
Exhibit 25, was also issued by the said trustee, namely, Mrs.
Vijaya Patel, concerning the administration and operation of
the Trust.
13. In the backdrop of the aforesaid facts, the present
appellant obtained a personal cheque for Rs. 6,50,000/- from
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the present respondent. According to the notice issued by the
appellant, the said amount represented the aggregate of
various sums allegedly advanced by the appellant and his wife
for the administration of the Trust, namely: (i) Rs. 50,000/-
allegedly advanced by the present appellant in the year 2005
for the administration of the Trust; (ii) Rs. 2,00,000/- allegedly
advanced by the wife of the present appellant; (iii) a further
sum of Rs. 50,000/- allegedly advanced by the wife of the
present appellant, Mrs. Shashiben, who was also a trustee and
was in charge of the administration of the Trust; and (iv) Rs.
1,50,000/- allegedly paid towards the rent of the premises in
which the de-addiction centre of the Trust was being
operated.
14. Thus, the personal cheque of the present respondent came
to be obtained by the present appellant on the premise that
the aforesaid amounts were recoverable from the respondent,
although the liabilities pertained to the administration and
functioning of the Trust after its management had been
handed over to the newly inducted trustees.
15. Admittedly, the liability to pay the rent was that of the
Trust. A perusal of the documentary evidence produced at
Exhibits 26 to 35 reveals that these are rent receipts issued by
the present appellant in favour of Tapasvi Charitable Trust,
acknowledging receipt of Rs.10,000/- towards monthly rent.
The said rent was admittedly paid by Mr. Vijay Kumar A.
Patel, who was the Project Director of Jagrut Vyasan Mukti
Hospital and who had assumed the responsibility of managing
the Trust pursuant to the Memorandum of Understanding.
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The said Memorandum was executed by, inter alia, Mr. Vijay
Kumar A. Patel and Mrs. Shashiben, the wife of the present
appellant. Thus, the documentary evidence clearly establishes
that the liability to pay the rent, as well as the other liabilities
referred to in the Memorandum of Understanding, was that of
the Trust and not of the present respondent in her personal
capacity. According to the appellant, an aggregate sum of
Rs.6,50,000/- had become due and payable towards the Trust.
However, instead of obtaining a cheque from the Trust, the
present appellant obtained a personal cheque from the
present respondent, drawn on her personal bank account. The
said cheque, upon presentation, came to be dishonoured by
the Bank on the ground of "insufficient funds." and returned
vide return memo dated 07.06.2006.
16. Consequently, the present appellant issued a statutory
legal notice dated 28.06.2006, which is produced at Exhibit 17
(page 103 of the paper book). In the said notice, it was
specifically stated that the outstanding rent of Rs.1,50,000/-
for the year 2005 formed part of the consolidated claim of
Rs.6,50,000/-. By clubbing the alleged advances and the rent
dues, the appellant demanded payment of the total sum of
Rs.6,50,000/- from the present respondent. The notice further
asserted that, although the amount was allegedly due and
recoverable in connection with the affairs of the Trust, the
present respondent had issued, in her personal capacity, a
cheque bearing the said amount, drawn on Bank of Baroda,
Kothi Branch, Vadodara, which was received by the appellant
on 01.06.2006.
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17. The said notice was duly served upon the present
respondent, who submitted a detailed reply, which is
produced at Exhibit 20. In the said reply, the respondent
specifically stated that, with effect from 01.02.2005, she had
ceased to be in charge of the administration of the Trust and
was no longer responsible for its day-to-day affairs. It was
further pointed out that, by virtue of the Memorandum of
Understanding produced at Exhibit 21, the present appellant,
along with Mr. Vijay Kumar A. Patel and Mr. Manoj B. Rao,
had accepted and undertaken the responsibility for managing
the Trust and discharging its liabilities.
18. The respondent further referred to the correspondence
exchanged pursuant to the said Memorandum of
Understanding, including the letter requesting the respondent
to issue her consent for changing the authorised signatory in
the bank records, as well as the letters produced at Exhibits
24 and 25 addressed by the newly authorised trustees to the
Manager, State Bank of India, Saloon Bazaar Branch, Nadiad,
seeking permission to operate the Trust's bank account and to
withdraw amounts required for the day-to-day administration
of the Trust. The respondent, therefore, categorically asserted
that the liabilities referred to in the statutory notice were
those of the Trust and the persons who had taken over its
management under the Memorandum of Understanding, and
not her personal liabilities. The respondent also produced
copies of the rent receipts issued by the present appellant
acknowledging payment of rent deposited by Dr. Vijay Kumar
Patel, who was a signatory to the Memorandum of
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Understanding and had been inducted as a trustee of Tapasvi
Charitable Trust. The said receipts demonstrate that Dr. Vijay
Kumar Patel had paid the rent for the relevant period in
accordance with the responsibilities assumed under the
Memorandum of Understanding.
19. A perusal of the exhibited rent receipts further reveals
that, for the period from June 2004 to March 2005, the
present appellant had accepted the rent in cash and had
issued corresponding receipts. Even during the year 2005, the
appellant acknowledged receipt of the rent by issuing duly
stamped revenue receipts.
20. During his cross-examination before the Trial Court, the
present appellant admitted that the signatures appearing on
the said revenue receipts were of him, and that he had issued
those receipts acknowledging the rent. However, he sought to
qualify his admission by stating that, although he had signed
and issued the revenue receipts, he had not actually received
the amounts mentioned therein. Such a stand taken by the
appellant is wholly inconsistent with the documentary
evidence on record, as the issuance of duly signed revenue
receipts acknowledging receipt of rent prima facie establishes
that the rent was accepted by the appellant.
21.This conduct itself is doubtful, inasmuch as, without
receiving the amount of rent, whether any prudent person
would issue a revenue receipt in advance. It is an admitted
fact that, with effect from 01.02.2005, the present respondent
had no liability whatsoever towards the administration of the
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Trust, as the charge of the Trust had subsequently been taken
over by the newly inducted trustees, including the wife of the
present appellant and two others. Therefore, the liability to
pay the said amount cannot be fastened upon the present
respondent. However, without considering these facts, the
Trial Court has recorded the conviction against the present
respondent.
22. The further fact required to be mentioned is that the
amount shown as due and payable by the present respondent
includes the amount allegedly advanced by the wife of the
present appellant, for which the wife has neither issued any
legal notice nor demanded the said amount from the present
respondent. Whereas, the said amount was not at all payable
to the present appellant. However, in the legal notice, it was
mentioned that the amount advanced by his wife was also
included in the total amount of Rs.6,50,000/-. Without
examining his wife as a witness, this fact cannot be proved,
namely, whether such amount was in fact advanced by the
wife, whether she had issued any legal notice, or whether the
present respondent was liable to repay the said amount.
23. It is also further to be noted that the amount which is due
and payable towards the rent for the premises used by the
Trust is the liability of the trustees of the Trust. Therefore,
without joining all the trustees, the prosecution has been
instituted only against the present respondent. It appears that
the cheque of the present respondent was obtained, and since
the cheque bore the signature of the present respondent, the
remaining particulars in the cheque were either filled in by
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the present appellant. The Trial Court has also not examined
this aspect, namely, that except for the signature appearing
on the cheque, the remaining writings on the cheque were not
examined. The Trial Court has failed to consider or adjudicate
upon this aspect.
24. At this stage, it is appropriate to refer the provision of
Sections 138, 118, 139 and 141 of the NI Act, which read as
under:-
“138. Dishonour of cheque for insufficiency, etc., of funds in
the account.—Where any cheque drawn by a person on an
account maintained by him with a banker for payment of any
amount of money to another person from out of that account for
the discharge, in whole or in part, of any debt or other liability, is
returned by the bank unpaid, either because of the amount of
money standing to the credit of that account is insufficient to
honour the cheque or that it exceeds the amount arranged to be
paid from
that account by an agreement made with that bank, such person
shall be deemed to have committed an offence and shall, without
prejudice to any other provision of this Act, be punished with
imprisonment for [a term which may be extended to two years’], or
with fine which may extend to twice the amount of the cheque, or
with both:
Provided that nothing contained in this section shall apply unless—
(a) thecheque has been presented to the bank within a period of six
months from the date on which it is drawn or within the period of
its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case
may be, makes a demand for the payment of the said amount of
money by giving a notice; in writing, to the drawer of the cheque,
[within thirty days] of the receipt of information by him from the
bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said
amount of money to the payee or, as the case may be, to the holder
in due course of the cheque, within fifteen days of the receipt of the
said notice.
Explanation.—For the purposes of this section, “debt of other
liability” means a legally enforceable debt or other liability.
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118. Presumptions as to negotiable instruments.—Until the
contrary is proved, the following presumptions shall be made:—
(a) of consideration:—that every negotiable instrument was made
or drawn for consideration, and that every such instrument, when
it has been accepted, indorsed, negotiated or transferred, was
accepted, indorsed, negotiated or transferred for consideration;
(b) as to date:—that every negotiable instrument bearing a date
was made or drawn on such date;
(c) as to time of acceptance:—that every accepted bill of exchange
was accepted within a reasonable time after its date and before its
maturity;
(d) as to time of transfer:—that every transfer of a negotiable
instrument was made before its naturity;
(e) as to order of indorsements:—that the indorsements appearing
upon a negotiable instrument were made in the order in which they
appear then on;
(f) as to stamp:— that a lost promissory note, bill of exchange or
cheque was duly stamped;
(g) that holder is a holder in due course:—that the holder of a
negotiable instrument is a holder in due course: provided that,
where the instrutment has been obtained from its lawful owner, or
from any person in lawful custody thereof, by means of an offence
or fraud, or has been obtained from the maker or acceptor thereof
by means of an offence or fraud, or for unlawful consideration, the
burden of proving that the holder is a holder in due course lies
upon him.
139. Presumption in favour of holder.—It shall be presumed,
unless the contrary is proved, that the holder of a cheque received
the cheque of the nature referred to in section138 for the
discharge, in whole or in part, of any debt or other liability.
141. Offences by companies.—(1) If the person committing an
offence under section 138 is a company, every person who, at the
time the offence was committed, was in charge of, and was
responsible to, the company for the conduct of the business of the
company, as well as the company, shall
be deemed to be guilty of the offence and shall be liable to be
proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render
any person liable to punishment if he proves that the offence was
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committed without his knowledge, or that he had exercised all due
diligence to prevent the commission of such offence:
[Provided further that where a person is nominated as a Director of
a company by virtue of his holding any office or employment in the
Central Government or State Government or a financial
corporation owned or controlled by the Central Government or the
State Government, as the case may be, he shall not be liable for
prosecution under this Chapter.]
(2) Notwithstanding anything contained in sub-section (1), where
any offence under this Act has been committed by a company and it
is proved that the offence has been committed with the consent or
connivance of, or is attributable to, any neglect on the part of, any
director, manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be deemed
to be guilty of that offence and shall be liable to be proceeded
against and punished accordingly.
Explanation.—For the purposes of this section, —
(a) “company” means any body corporate and includes a firm or
other association of individuals; and
(b) “director”, in relation to a firm, means a partner in the firm.”
25. In view of the above, the question arises as to whether
there was any legally enforceable debt against the present
respondent. In the absence of the necessary facts required to
be proved by corroborative evidence, the Trial Court has
committed a serious error of law as well as on facts. It is also
required to be noted herein that the Trial Court, while passing
the impugned judgment of conviction against the present
respondent, failed to consider the fact that, in criminal
jurisprudence, there is no provision of residuary capacity
whereby a person can recover an amount on behalf of a third
person. In the present case, the appellant is seeking to
recover the amount on behalf of his wife.
26. At this juncture, it is also required to be noted herein that
from 2000 to 2005 following income tax slab was in
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operation:-
Up to Rs.50,000 : Nil (Tax-free)
Rs. 50,001 to Rs. 60,000 : 10% of the amount exceeding
Rs. 50,000
Rs. 60,001 to Rs.1,50,000 : Rs. 1,000 + 20% of the amount
exceeding Rs. 60,000
Above Rs. 1,50,000: : Rs.19,000 + 30% of the
amount exceeding Rs.1,50,000
27. In view of the above facts, if the wife of the appellant
had advanced Rs.2,00,000/- in cash in the year 2005, it was
not a small amount, and for such an amount, the same was
required to be reflected in the income tax records. In this
regard, the appellant was examined, and in response to the
said question, he replied that whether the amount was
mentioned he was not aware about it. It was further stated
that the account books and other account-related documents
maintained by the wife of the present appellant were lost due
to theft, and an FIR in that regard was registered in the year
2007. However, the said FIR, which was referred to by the
appellant, was not produced before the Court to establish that
the account books and other relevant documents were lost
due to theft.
28. Further, in his cross-examination, the appellant
specifically stated and contended that he did not want to
examine his wife as a witness, nor did he want to produce any
documents to show whether the said amount was reflected in
the account books or not. However, the Trial Court, without
considering this aspect, proceeded to pass the impugned
judgment and order of conviction, whereby the present
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respondent was convicted for the alleged offence.
29. Even without joining the other trustees, the complaint
itself was not maintainable, for which learned counsel Mr.
Buch has relied upon the judgment of the Hon’ble Apex Court
in the case of Mr. Bijoy Kumar Moni (supra) more
particularly the observations made in paragraph 52 of the said
judgment which read as under.
“52.Section 138 of the NI Act does not envisage that only those
cases where a cheque issued towards the discharge of the personal
liability of the drawer towards the payee gets dishonoured would
come within the ambit of the provision. The expression “of any debt
or other liability” appearing in Section 138 when read with the
Explanation to the provision is wide enough to bring any debt or
liability which is legally enforceable within its fold. Thus, the
requirement under the provision is that the debt or any other
liability has to be legally enforceable and the emphasis is not on
the existence of such debt or other liability between the drawer
and the payee. A number of decisions of this Court have clarified
that even those cases where a person assumes the responsibility of
discharging the debt of some other person, and in furtherance
thereof draws a cheque on an account maintained by him, which
subsequently gets dishonoured upon being presented before the
drawee, would be covered by Section 138 if the payee is able to
establish that there was some sort of an arrangement by way of
which the debt was assumed by the drawer.”
30. I am in agreement with the ratio laid down by the
Hon’ble Apex Court, wherein the learned counsel for the
appellant, relying upon the observations made by the Hon’ble
Apex Court, submitted that the expression “any debt or other
liability” is required to be considered. Since the present
respondent was not under any actual debt, but the cheque
was issued towards some other liability, the question arises
before this Hon’ble Court as to whether, in respect of such
other liability, when the said liability was accepted by the
other trustees, the present respondent can be held liable and
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guilty for the same. This important issue was not considered
by the Trial Court while recording the conviction against the
present respondent.
31. Thus, the First Appellate Court, while reversing the
judgment of the Trial Court, has observed from paragraph No.
9 onwards that the present respondent was not liable and that
no legally enforceable debt was established against the
present respondent by the appellant. Therefore, in the
absence of the other trustees of the Charitable Trust, the
complaint itself was not maintainable, particularly because,
after 01.02.2005, the liability was taken over by the assignees
under the said document, i.e., Exhibit 21.
32. The First Appellate Court, after considering all the
documentary as well as oral evidence produced by the
appellant, has discussed in detail the reasons for reversing the
findings recorded by the Trial Court. The First Appellate
Court, after considering the evidence on record and the
decisions of the Hon’ble Apex Court, has rightly arrived at the
conclusion while reversing the judgment of the Trial Court.
33. At this stage, it is appropriate to refer the decision of the
Hon’ble Apex Court in case of Kamala S. vs. Vidhyadharan
M.J. and Anr. Reported in 2008(1) GLR 423 more
particularly head note and paragraph Nos. 4, 17 and 18.
“Heard note:-
Negotiable Instruments Act, 1881 (XXVI of 1881) Sec. 118(a),Secs.
138 & 139- Presumption that the cheque was issued for discharge
of "any debt or other liability" -Burden of proof in the matter on the
accused to rebut the presumption is of "preponderance of
probability" - Inference therefor can be drawn from the
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circumstances -On facts found that defence of accused was
probable -Held, High Court had wrongly reversed the acquittal.
4. According to the appellant, Smt. Sathyabhama owned a property
bearing old Survey No. 1363/3-1-1 measuring an area of 47 cents.
She had executed two Sale Deeds, one in favour of Mr.
Ramchandran Nair and another in favour of Thankamony
conveying to them 20 cents and 27 cents respectively. The Sale
Deeds were allegedly executed in favour of the aforementioned
persons as a security in lieu of some amount paid in her favour.
However, when the Thankamony and Ramchandran Nair demanded
the money back from the wife of the respondent, the appellant was
approached for purchase of the said property for a consideration of
Rs. 5 lakhs. On 05.09.1997, the said Thankmony executed a Deed
for Sale in favour of the appellant wherefor she had withdrawn a
sum of Rs. 4 lakhs from bank. The said amount was paid to
Sathyabhama which in turn was paid to Thankamony and
Ramchandran Nair. However, as there was a dispute in regard to
the exact area of the property and measurement therefor had not
been taken, she had given a cheque to Sathyabhama in the name of
her husband as demanded by Sathyabhama on an understanding
that the consideration shall be reduced if the area found in the Sale
Deed is found short. As upon measurement, the area of the
property conveyed in his favour was found to be short by 4 cents,
the appellant paid a sum of Rs. 20,000/- to the respondent on
27.11.1997. Allegedly, however the respondent had asked for a
sum of Rs. 10,000/- more from the appellant, but a sum of Rs.
5,000/- was only given to him on 18.12.1997 towards full and final
settlement thereof and in that view of the matter no further amount
was due from her.
8. On the said finding, the learned Trial Judge recorded a judgment
of acquittal. On an appeal preferred by the respondent herein
thereagainst, the High Court, however, reversed the said finding,
opining that the appellant had not been able to discharge the
burden of proof laid down under Sections 138 and 139 of the Act,
which read as under :
"138. Dishonour of cheque for insufficiency, etc., of
funds in the account.Where any cheque drawn by a
person on an account maintained by him with a banker
for payment of any amount of money to another person
from out of that account for the discharge, in whole or
in part, of any debt or other liability, is returned by the
bank unpaid, either because of the amount of money
standing to the credit of that account is insufficient to
honour the cheque or that it exceeds the amount
arranged to be paid from that account by an agreement
made with that bank, such person shall be deemed to
have committed an offence and shall, without prejudice
to any other provision of this Act, be punished with
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imprisonment for a term which may extend to two
years, or with fine which may extend to twice the
amount of the cheque, or with both:
Provided that nothing contained in this section shall apply
unless
(a) the cheque has been presented to the bank within a
period of six months from the date on which it is drawn
or within the period of its validity, whichever is earlier.
(b) the payee or the holder in due course of the cheque,
as the case may be, makes a demand for the payment of
the said amount of money by giving a notice, in writing,
to the drawer of the cheque, within thirty days of the
receipt of information by him from the bank regarding
the return of the cheque as unpaid, and
(c) the drawer of such cheque fails to make the payment
of the said amount of money to the payee or, as the case
may be, to the holder in due course of the cheque,
within fifteen days of the receipt of the said notice.
Explanation.For the purposes of this section, "debt or other
liability" means a legally enforceable debt or other liability."
"139. Presumption in favour of holder.It shall be presumed, unless
the contrary is proved, that the holder of a cheque received the
cheque of the nature referred to in section 138 for the discharge,
in whole or in part, or any debt or other liability."
17. This Court clearly laid down the law that standard of proof in
discharge of the burden in terms of Section 139 of the Act being of
preponderance of a probability, the inference therefor can be
drawn not only from the materials brought on record but also from
the reference to the circumstances upon which the accused relies
upon. Categorically stating that the burden of proof on accused is
not as high as that of the prosecution, it was held;
"33. Presumption drawn under a statute has only an
evidentiary value. Presumptions are raised in terms of the
Evidence Act. Presumption drawn in respect of one fact may
be an evidence even for the purpose of drawing presumption
under another."
18. It was further observed that ;
" 38. If for the purpose of a civil litigation, the defendant
may not adduce any evidence to discharge the initial burden
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placed on him, a "fortiori" even an accused need not enter
into the witness box and examine other witnesses in support
of his defence. He, it will bear repetition to state, need not
disprove the prosecution case in its entirety as has been held
by the High Court.
39. A presumption is a legal or factual assumption drawn
from the existence of certain facts."
34. It is also appropriate to refer the decision of the Hon’ble
Apex Court in case of Sureshchandra Chandrashankar
Joshi vs. State of Gujarat and Anr. reported in 2010(1)
GLR 271 more particularly paragraph Nos. 11 and 12 and the
decision in case of Shanku Concretes Pvt. Ltd. and Others
vs. State of Gujarat and Another reported in 2000(3)
Crimes 602.
35. Even as per the decision of the Hon’ble Apex Court in
the case of Babubhai (supra), the accused has been successful
in bringing on record a probable defence, which has
ultimately resulted in the shifting of the burden upon the
complainant by putting questions regarding legal dues in the
cross-examination.
36. On perusal of the record of the appeal, it transpires that
the respondent-accused has established his innocence before
the First Appellate Court and that, after due appreciation of
the oral as well as documentary evidence and other material
placed on record, the First Appellate Court has rightly passed
the impugned judgment and order of acquittal. The findings
recorded by the First Appellate Court are just, proper and in
accordance with the settled principles of law and, therefore,
no interference is warranted by this Court.
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37. It is well settled by catena of decisions that the First
Appellate Court has full power to review, re-appreciate and
reconsider the evidence upon which the order of acquittal is
founded. However, First Appellate Court 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 their innocence is further reinforced,
reaffirmed and strengthened by the trial Court.
38. Further, if two reasonable conclusions are possible on
the basis of the evidence on record, the First Appellate Court
should not disturb the finding of acquittal recorded by the
trial Court. Further, while exercising the powers in appeal
against the order of acquittal, the Court of appeal would not
ordinarily interfere with the order of acquittal unless the
approach of the lower Court is vitiated by some manifest
illegality and the conclusion arrived at would not be arrived at
by any reasonable person and, therefore, the decision is to be
characterized as perverse. Merely because two views are
possible, the Court of appeal would not take the view which
would upset the judgment delivered by the Court below.
However, the First Appellate Court has a power to review the
evidence if it is of the view that the conclusion arrived at by
the Court below is perverse and the Court has committed a
manifest error of law and ignored the material evidence on
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record. A duty is cast upon the First Appellate Court, in such
circumstances, to re-appreciate the evidence to arrive to a
just decision on the basis of material placed on record to find
out whether the accused are connected with the commission
of the crime with which he is charged.
39. At this stage, it is appropriate to refer the decision of the
Hon’ble Apex Court in the case of Dattatraya vs.
Sharanappa reported in (2024) 8 SCC 573, wherein the
Hon’ble Apex Court has observed as under:-
“33.1 Criminal jurisprudence emphasises on the fundamental
essence of liberty and presumption of innocence unless proven
guilty. This presumption gets emboldened by virtue of concurrent
findings of acquittal. Therefore, this court must be extra-cautious
while dealing with a challenge against acquittal as the said
presumption gets reinforced by virtue of a well-reasoned
favourable outcome. Consequently, the onus on the prosecution
side becomes more burdensome pursuant to the said double
presumption.
33.3 Where two views are possible, then this Court would not
ordinarily interfere and reverse the concurrent findings of
acquittal. However, where the situation is such that the only
conclusion which could be arrived at from a comprehensive
appraisal of evidence, shows that there has been a grave
miscarriage of justice, then, notwithstanding such concurrent view,
this Court would not restrict itself to adopt an oppugnant view.
33.4 To adjudge whether the concurrent findings of acquittal are
‘perverse’ it is to be seen whether there has been failure of justice.
This Court in Babu v. State of Kerala clarified the ambit of the term
‘perversity’ as:
“20…...if the findings have been arrived at by ignoring or
excluding relevant material or by taking into consideration
irrelevant/admissible material. The finding may also be said
to be perverse if it is ‘against the weight of evidence’, or if
the finding so outrageously defies logic as to suffer from the
vice of irrationality.”
33.6 Furthermore, such interference is necessitated to safeguard
interests of justice when the acquittal is based on some irrelevant
grounds or fallacies in re- appreciation of any fundamental
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evidentiary material or a manifest error of law or in cases of non-
adherence to the principles of natural justice or the decision is
manifestly unjust or where an acquittal which is fundamentally
based on an exaggerated adherence to the principle of granting
benefit of doubt to the accused, is liable to be set aside. Say in
cases where the court severed the connection 12 (2023) 10 SCC
148. between accused and criminality committed by him upon a
cursory examination of evidences. [Vide State of Punjab v.
Gurpreet Singh and Others and Rajesh Prasad v. State of Bihar]
34. Upon perusal of the aforementioned principles and applying
them to the facts and circumstances of the present matter, it is
evident that there is no perversity and lack of evidence in the case
of the respondent- accused. The concurrent findings have backing
of detailed appraisal of evidences and facts, therefore, do not
warrant interference in light of above enlisted principles. In a
similar set of facts as in the present case, involving criminal
liability arising out of dishonour of cheque, this Court in M/s Rajco
Steel Enterprises v. Kavita Saraff dejected from reversing the
concurrent findings of acquittal of the accused therein and
underscored the principle of non-interference, unless such findings
are perverse or bereft of evidentiary corroboration or lacks
question of law.”
40. It is appropriate to refer the decision of the Hon’ble Apex
Court in the case of Rajco Steel Enterprises vs. Kavita
Saraff and another reported in (2024) 9 SCC 390,
wherein the Hon’ble Apex Court has observed as under:-
“12. We are dealing with a case where the First Appellate Court
exercising its jurisdiction under Section 374(3) of Code of Criminal
Procedure, 1973, ongoing through the analysis of evidence,
acquitted the accused/respondent no.1. The acquittal was further
upheld by the High Court in an appeal against acquittal under
Section 378 of the 1973 Code. The whole question involved in this
proceeding is as to whether the cheques were issued in discharge
of a debt and if it was so, then whether the accused/respondent
no.1 was able to rebut the presumption in terms of Section 118
read with Section 139 of the 1881 Act. In the light of the judgment
of this Court in the case of Narendra Pratap Narain Singh -vs-
State of U.P. the jurisdiction of this Court under Article 136 of the
Constitution of India to interfere with concurrent findings of fact is
not in question, when such findings are based on no evidence or
are perverse. The question, we have to address thus, is as to
whether the findings of the First Appellate Court and the High
Court are on no evidence or perverse. Both these Courts have
examined the evidence threadbare and in the opinion of these two
fora, go against the complainant/petitioner.”
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41. It is also appropriate to have a glance of the decision of
the Hon’ble Apex Court in the case of Basalingappa vs.
Mudibasappa reported in (2019) 5 SCC 418, Rangappa
vs. Sri Mohan reported in (2010) 11 SCC 441.
42. Further, in case of Babu Sahebagouda Rudragoudar
Vs. State of Karnataka, reported in AIR 2024 SC 2252 =
(2024) 8 SCC 149, the Hon'ble Apex Court has dealt with
the similar issue, more particularly, in paragraph Nos. 37 to
40. Hence, I am in complete agreement with the findings
recorded by the trial Court.
43. It is also worthwhile to refer to the recent decision of the
Hon’ble Supreme Court in the case of Ramesh vs. State of
Karnataka, reported in [2024] 9 SCC 169, wherein the
Hon’ble Supreme Court has held and observed in paras-20
and 21 as under:-
“20. At this stage, it would be relevant to refer to the general
principles culled out by this Court in Chandrappa and others vs.
State of Karnataka , regarding the power of the appellate Court
while dealing with an appeal against a judgment of acquittal. The
principles read thus:
“42. …. (1) An appellate court has full power to review,
reappreciate and reconsider the evidence upon which the order of
acquittal is founded.
(2) The Code of Criminal Procedure, 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
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nature of “flourishes of language” to emphasize 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.
21. In Rajendra Prasad v. State of Bihar, a three-Judge Bench of
this Court pointed out that it would be essential for the High
Court, in an appeal against acquittal, to clearly indicate firm and
weighty grounds from the record for discarding the reasons of the
Trial Court in order to be able to reach a contrary conclusion of
guilt of the accused. It was further observed that, in an appeal
against acquittal, it would not be legally sufficient for the High
Court to take a contrary view about the credibility of witnesses
and it is absolutely imperative that the High Court convincingly
finds it well-nigh impossible for the Trial Court to reject their
testimony. This was identified as the quintessence of the
jurisprudential aspect of criminal justice. Viewed in this light, the
brusque approach of the High Court in dealing with the appeal,
resulting in the conviction of Appellant Nos. 1 and 2, reversing
the cogent and well-considered judgment of acquittal by the Trial
Court giving them the benefit of doubt, cannot be sustained.”
44. Considering the entire evidence on record, it clearly
appears that there is no credible evidence to connect the
present accused with the alleged crime and the evidence on
record is not so convincing to prove beyond reasonable doubt
that the accused has committed the alleged crime. Therefore,
the accused cannot be convicted on the evidence on record.
45. On perusal of the impugned judgment and order, it
clearly transpires that the First Appellate Court has not
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committed any error of fact and law in appreciating the
evidence on record and in acquitting the accused from the
charges levelled against them. Even on re-appreciation of the
evidence, it clearly transpires that the prosecution has
miserably failed to prove the charge levelled against the
accused beyond reasonable doubt. Therefore, the impugned
judgment and order of the First Appellate Court is sustainable
and the present appeal is liable to be dismissed.
46. In view of the above, the present appeal is devoid of
merits and it deserves to be dismissed. Resultantly, it is
dismissed. The impugned judgment and order of acquittal
passed by the First Appellate Court is hereby confirmed. Bail
bond stands cancelled. Record and proceedings be sent back
to the concerned First Appellate Court forthwith.
Sd/-
(HEMANT M. PRACHCHHAK,J)
SURESH SOLANKI
Original copy of this order has been signed by the Hon'ble Judge.
Digitally signed by: SURESHKUMAR MOTIBHAI SOLANKI(HC00208), PRINCIPAL PRIVATE SECRETARY, at High Court of Gujarat on 07/08/2026 17:15:37
Page 46 of 46
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