PEOPLES CO-OP BANK LTD HINGOLIversusSUBHASH KARBHARI BHUTEKAR

2026:BHC-AUG:41975


                                                                     CriAppeal-596-2006
                                                  -1-

                         IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                    BENCH AT AURANGABAD

                                 CRIMINAL APPEAL NO. 596 OF 2006

                 Peoples Co-operative Bank Ltd.
                 Hingoli Br. Jalna
                 Through its authorised signatory
                 and Manager
                 Shashikant Prabhakar Kandi
                 Age 39 years, Occupation Service,
                 R/o. Mondha Jalna.                               … Appellant
                                                            [Original Complainant]
                       Versus

                 Subhash Karbhari Bhutekar
                 Age : 50 years, Occupation Business,
                 R/o. Khan-Pan Centre, Bhokerdan Naka,
                 Sasdar Bazar, Jalna.                             … Respondent
                                                                  [Original Accused]
                                                  …..
                            Mr. P. S. Agrawal, Advocate for the Appellant.
                           Mr. S. E. Siddiqui, Advocate for the Respondent.
                                                  .....

                                         CORAM :        ABHAY S. WAGHWASE, J.
                                         Reserved on        : 10.09.2026
                                         Pronounced on      : 11.09.2026

                 JUDGMENT :


                 1.    This is an appeal at the instance of original complainant who

                 had instituted proceedings under Section 138 of the Negotiable

                 Instruments Act, 1881 (NI Act) against present respondent vide STC

                 No. 2690 of 2002. Learned trial court, after hearing both sides and on

                 appreciating the evidence as well as law, acquitted the accused.

                 Hence, the present appeal.
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2.    Learned counsel Mr. Agrawal would submit that, complainant is

a co-operative bank and one Walmik had borrowed loan for hotel

Ruchi Vihar. That, present respondent-original accused stood

guarantor to the said loan. That the borrower failed to repay the loan

and therefore, on his behalf, accused issued cheque in the capacity of

guarantor. However, it was dishonoured. He pointed out that

thereafter, demand notice was dispatched but as in spite of time given

to repay the cheque amount, amount was not repaid, proceedings

under Section 138 of the NI Act were instituted.



3.    Learned counsel for the appellant would further submit that

there is no dispute that there was legally enforceable debt, i.e. loan

amount. That, accused had undertaken the responsibility of

repayment of loan by becoming guarantor. Cheque was also issued

and as such, issuance of cheque and signature over it was admitted.

Therefore, it is his submission that, presumption available under

Sections 118 and 139 of the NI Act comes into play. That, evidence of

complainant has remained intact, but learned trial court misread the

said evidence and by ignoring settled law, gave benefit of doubt to the

accused. That, approach of learned trial court is incorrect and on this

count, he invited attention of this Court to the observations of trial
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court, more particularly in para 6. According to him, the said

reasoning is incorrect and against the spirit of law under Section 138

of the NI Act. Consequently, he prays to allow the appeal by setting

aside the impugned order.



4.    Learned counsel for the respondent-original accused would

justify the acquittal for complainant having failed to prove essential

ingredients to attract the offence under Section 138 of NI Act.



5.    After hearing above submissions, evidence adduced before

learned trial court is put to scrutiny. Complainant seems to have

adduced evidence of PW1 Gopal Agrawal at Exhibit 14 and also

adduced evidence of PW2 Shashikant Kandi at Exhibit 23, apart from

placing on record the cheque in question at Exhibit 17, bank memo at

Exhibit 18, office copy of notice, reply, acknowledgment of receipt

and RPAD.



6.    In his affidavit of evidence, complainant has reiterated the

contents of complaint. However, while facing cross, there is admission

that no amount was given to accused as loan and nothing was due

from him towards the said loan, and that accused stood as a

guarantor by mortgaging a plot which is still not auctioned. It is
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admitted that two months prior to filing of case, borrower Walmik

tendered application showing his readiness and willingness to deposit

the amount. There is also admission that, at the time of filing case,

after issuing notice to the accused, the borrower Walmik had already

deposited Rs.10,000/- towards part payment of the loan amount.



7.    In the light of above discussion, it is clear that original

accused/present respondent was not the main borrower and rather he

was a guarantor who had mortgaged his own plot as a security for

repayment of loan borrowed by Walmik. PW2 has admitted that

accused himself was not a borrower of any loan. Thus, apparently,

cheque in question was issued in the capacity of guarantor. However

there is further admission by complainant’s witness that, after issuing

legal notice, original borrower Walmik had repaid Rs.10,000/- as part

payment and it was duly accepted by complainant. Therefore, in such

situation and circumstance, if out of Rs.25,000/- legal dues, part

payment to the tune of Rs.10,000/- was received, then there were no

legal dues to the extent of Rs.25,000/-. It was expected of

complainant to give an endorsement on the cheque acknowledging

the receipt of part payment. Consequently, the amount reflected on

the cheque was not the amount due towards Walmik. In fact the legal

debts were not to the tune which was reflected over the instrument.
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8.    At this juncture, it would be useful to refer to the judgment of

the Hon’ble Apex Court in the case of Dashrathbhai Trikambhai Patel

v. Hitesh Mahendrabhai Patel and another          (2023) 1 SCC 578

wherein it has been observed that, when part payment of a debt is

made after the cheque was drawn but before the cheque is encashed,

then such payment, it was held that, must be endorsed on the cheque

under Section 56 of the NI Act and the cheque cannot be presented

for encashment without recording the part payment. It was further

observed that, if the unendorsed cheque is dishonoured on

presentation, the offence under Section 138 would not be attracted

since the cheque does not represent a legally enforceable debt at the

time of encashment.



9.    The above ruling is squarely applicable here as, after drawing of

cheque and before initiating action under Section 138, complainant

acknowledges receipt of part payment of Rs.10,000/- and therefore,

complainant was expected to endorse to that extent on the instrument

which was presented for realization. This precisely does not seem to

have been done by the complainant and therefore, as rightly held by

trial court, there was no legally enforceable debt and it was not

proved by complainant in trial court.
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                                 -6-




10.   Further, as pointed out, and is also evident from the very

complaint that details of the entire transaction of loan are not

forthcoming from the complainant’s side on record. How much was

the exact loan is not stated in complainant, nor it is deposed by PW1.

It is incumbent upon the complainant, and rather it is a burden on

complainant, to establish legally enforceable debt at the time of

presentation of cheque. Unless that is done so, presumption available

under NI Act would not get attracted.



11.   For above reasons, this Court does not find there to be any

error on the part of learned trial court in acquitting the accused.

Hence, the following order :

                               ORDER

                  The Criminal Appeal is dismissed.



                                         [ABHAY S. WAGHWASE, J.]



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