Bombay High Court
MANOJ PUNAMCHAND OSWALversusVIJAY OIMKARMAL GANDHI AND ANR
- Decided
- Disposal
- Dismissed
Holding
The conviction under Section 138 NI Act stands as the statutory presumption was not rebutted and the revisional court cannot disturb the lower courts' concurrent findings.
Summary
The appellant Manoj Oswal was convicted under Section 138 of the Negotiable Instruments Act for issuing a cheque of Rs.8.5 lakh that was dishonoured. He appealed the conviction, arguing that the cheque was deposited in a different account than the payee's, that there was no clearing stamp, and that the presumption under Sections 118 and 139 was not applicable. The High Court held that the appellant did not deny his signature, so the statutory presumption that the cheque was drawn for a debt stood, and his defence was not proven on a pre‑ponderance of probabilities. The Court also ruled that a revisional court cannot re‑appreciate evidence or disturb the concurrent findings of fact of the lower courts. Consequently, the revision application was dismissed, the rule discharged, and the appellant’s bail bond cancelled.
Issues considered
- The ingredients of Section 138 of the Negotiable Instruments Act are satisfied despite the alleged break in the statutory chain of the cheque.
- Whether the presumption under Sections 118 and 139 of the NI Act can be rebutted by the accused.
- Whether the revisional court may re‑appreciate evidence and disturb the concurrent findings of fact of the trial and appellate courts.
- Whether the absence of a clearing stamp or bank endorsement defeats the conviction.
- The relevance of the complainant’s financial capacity to the prosecution’s case.
Legislation cited
- Code of Criminal Procedure, 1973 — s. 397, 401
- Income Tax Act, 1961 — s. 269SS, 271AAD
- Negotiable Instruments Act, 1881 — s. 118, 138, 139
Subjects
- Section 138 NI Act
- Negotiable Instruments Act
- presumption under Sections 118 and 139
- revision jurisdiction
- CrPC Section 397
- cheque dishonour
- conviction upheld
- evidence re‑appraisal
Judgment
903 Cr. REVN 11-10 C2.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL REVISION APPLICATION NO. 11 OF 2010
Mr. Manoj Punamchand Oswal,
Age – 28 years, Occupation – Business,
Residing at Anand Park, Meera Society,
SNEHA Flat No. 24, Building No.4, Shankarshet Road,
NITIN
CHAVAN Pune. ...Applicant
Digitally signed Versus
by SNEHA NITIN
CHAVAN
Date: 2026.09.30
1. Shri. Vijay Omkarmal Gandhi
20:11:37 +0530
Age – 42 years, Occupation – Business,
Residing at – C/45, Adinath Society,
Pune Satara Road, Pune – 411 037.
2. State of Maharashtra ...Respondents
WITH
INTERIM APPLICATION NO. 146 OF 2026
IN
CRIMINAL APPLICATION NO. 9 OF 2010
IN
CRIMINAL REVISION APPLICATION NO. 11 OF 2010
Shri. Vijay Omkar Gandhi ...Applicant
V/s.
Shri. Manoj Punamchand Oswal and Anr. ...Respondents
****
Mr. R. N. Sanghavi for the Applicant.
Mr. Shubhankar Kulkarni for Respondent No.1 and for Applicant in IA.
Ms. Rashmi Tendulkar, APP for Respondent No.1/State.
****
CORAM : M.M. SATHAYE, J.
RESERVED ON : 06th MAY, 2026
PRONOUNCED ON : 30th SEPTEMBER 2026
JUDGMENT :
1. Invoking Section 397 read with Section 401 of Code of
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Criminal Procedure, 1973 (‘CrPC’ for short), the Revision Applicant is
challenging the Judgment and Order dated 11.01.2010 passed by the
Ad-Hoc Additional Sessions Judge, Pune in Criminal Appeal No. 438 of
2005, thereby dismissing the appeal and confirming the Judgment and
Order dated 15.11.2005 passed by the Judicial Magistrate First Class,
Pune in CC No. 733 of 2002, convicting the Revision Applicant for
offence punishable under Section 138 of the Negotiable Instruments
Act, 1881 (‘NI Act’ for short) and sentencing him to suffer simple
imprisonment for 18 months and to pay compensation of
Rs.10,00,000/- and in default of payment of compensation to suffer
simple imprisonment of 3 months.
BACKGROUND
2. Applicant is the Accused and Respondent No.1 is the
Complainant.
3. According to the Complainant, both the Complainant and
Accused are businessmen, acquainted with each other for last many
years. The complainant carried on business of supplying building
material whereas Accused has a shop of selling woods, timber, plywood
etc. In second week of November, 2001, the Accused approached the
Complainant and demanded hand-loan of Rs.8,50,000/- for business.
The Complainant made arrangements and paid the said amount on
24.11.2001 in cash by way of hand-loan. Against the said amount, the
Accused issued cheque dated 04.02.2002 drawn on Muslim
Co.Operative Bank Ltd., Pune for Rs.8,50,000/- in favour of the
Complainant. When the Complainant deposited the said cheque in his
bank, it was dishonoured on 13.02.2002 with remark ‘refer to drawer’.
The Complainant thereafter issued demand notice on 28.02.2002. The
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Accused did not make payment and issued false reply and complaint
was filed.
4. The Complainant examined himself and produced
documentary evidence in the form of original cheque, counter deposit
slip, cheque return memo, copy of demand notice, acknowledgment
and notice reply.
5. The Revision Applicant/Accused examined himself and his
brother and an Income Tax Officer and one more witness.
6. The Accused has not denied the signature on the cheque. In
short, the defence of the Accused is that he has not taken the loan; that
he is not having any business; that he is without any service and he is
maintained by his family.
7. Learned Magistrate who heard and tried the said case
convicted the Revision Applicant and sentenced him as stated above.
The Revision Applicant filed said appeal challenging the conviction and
sentence, which is dismissed under impugned order.
8. In these circumstances, the Revision Applicant has filed
present Revision Application.
9. Record shows that on 21.04.2011, this Court suspended the
sentence as well as order of compensation by way of interim relief. The
Revision Application is admitted on 22.12.2011 and it is recorded that
the Applicant has already deposited an amount of Rs.7.5 lakh in the
Trial Court and the Appellate Court in addition to furnishing bank
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guarantee of Rs.2.5 lakh. Hence, the interim relief granted earlier, was
continued till final disposal.
SUBMISSIONS
10. Learned Counsel for the Applicant submitted as under.
10.1. That this is a case of jurisdictional failure and there is complete
absence of foundational ingredients of Section 138 of the NI Act.
10.2. That the Complainant’s version has been blindly accepted by the
Courts below.
10.3. That the cheque admittedly was drawn in the name of Vijay O.
Gandhi, but it was deposited in the account of Vijay Industries and
dishonour memo is also in the name of Vijay Industries and therefore
the statutory chain is broken. Therefore, there is no dishonour in the
eyes of law. That payee as well as presenter are different and therefore
the prosecution is fundamentally defective. That there is no return
memo in the name of payee (Vijay O. Gandhi). That there cannot be
presumption under Section 118 read with Section 139 of the NI Act in
absence of foundational facts.
10.4. That there is no clearing stamp or bank endorsement and the
bank witness has admitted uncertainty.
10.5. That the Complainant has not proved his financial capacity as
there is no proof of income-source and no income tax records, rendering
the transaction inherently doubtful. That the Respondent/Complainant
was not even in a position to repay small amount of Rs.1,00,000/- to a
third party in the proceedings under Section 138 of NI Act that was
initiated in 2001. That therefore the claim is inherently improbable.
10.6. That there is contradiction/inconsistency about the purpose for
which the alleged loan was advanced. That considering the age gap
between the parties, they cannot be called as friends.
10.7. That there is violation of Income Tax law and hand loan is based
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on illegal cash transaction; therefore, it is not legal debt. That there is
no document in support of loan transaction.
10.8. That the Accused has established probable defence that blank
signed cheque was lost and it was misused by the Complainant and this
is sufficient to rebut the presumption.
10.9. That a dispute of civil nature has been converted into criminal
prosecution and the Courts below have convicted the Revision Applicant
in mechanical manner.
10.10. That cheque is not deposited on the same day and there is
no explanation for the same. He relied on following Judgments in
support of his case.
(i) Rajendraprasad Gangabishen Porwal V/s.
Santoshkumar Parasmal Saklecha and Anr. 2008(1) Bom. C.R.
(Cri.) 647.
(ii) M.S. Narayana Menon alias Mani V/s. State of Kerala
and Anr. (2006) 6 SCC 39.
(iii) Milind Shripad Chandurkar V/s. Kalim M. Khan and
Anr. 2011(4) Mh. L.J. 96.
(iv) Xavier William V/s. Cochin Acids & Chemicals Pvt.
Ltd. And Ors. 2014 0 Supreme(Ker) 90.
11. On the other hand, learned Counsel for the Respondent No. 1
– the Complainant submitted as under.
11.1. That the Accused has not denied the signature and has adopted
changing stands about his residence with father and being separated
from father and being maintained on interest of the deposit kept by
father. Therefore, the Accused is untrustworthy. That even testimony of
brother of Accused is inconsistent as he has claimed the Accused to be
his employee while showing ignorance about his business activities.
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11.2. That the stand about cheque book is also not clear because, in
one breath he says the cheque book is lost and in another, he says the
cheque is stolen by the Accused.
11.3. That the cheque is drawn in the name of Vijay O. Gandhi,
demand notice is issued by Vijay O. Gandhi who is payee and the bank
witness has stated that cheque was credited in the account of Vijay O.
Gandhi and not in the account of Vijay Industries. Hence nothing is
fundamentally wrong as alleged. That presumption in favour of the
Complainant is not sufficiently rebutted.
11.4. That complaint regarding alleged theft of cheque did not even
result in issue of process.
11.5. That the intimation to police about alleged stolen cheque was
given late.
11.6. That financial capacity of the Complainant has been already
considered by the Courts below and some stray act of giving hand-loan
cannot be considered as money-lending.
11.7. That in absence of perversity, concurrent findings may not be
disturbed in revisional jurisdiction.
11.8. That dishonour of cheque due to ‘refer to drawer’ is also
dishonour punishable under Section 138 of the NI Act.
11.9. That advancing hand-loan in cash exceeding Rs. 20,000/- by itself
will not make the debt illegal.
11.10. That allegation of stolen cheque being misused is not
proved and allegation of collusion with bank is nothing but a biased
statement. He relied on following Judgments in support of his case.
1. Oriental Bank of Commerce Vs. Prabodh Kumar Tewari
2022 SCC OnLine SC 1089.
2. Tedhi Singh Vs. Narayan Dass Mahant (2022) 6 SCC 735.
3. Basalingappa Vs. Mudibasappa (2019) 5 SCC 418.
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4. Bir Singh Vs. Mukesh Kumar (2019) 4 SCC 197.
5. Kishan Rao Vs. Shankargouda (2018) 8 SCC 165.
6. Laxmi Dyechem Vs. State of Gujarat and Others (2012) 13
SCC 375.
7. Rangappa Vs. Sri Mohan (2010) 11 SCC 441.
8. Gajanan Vs. Appasaheb Siddamallappa Kaveri [High Court
of Karnataka, Dharwad Bench, CR. Revision Petition No. 2011
of 2013 dated 18.11.2022].
REASONS AND CONCLUSION
12. I have considered the rival submissions and perused the
record.
13. It is necessary to note at the outset that revisional jurisdiction
is invoked challenging the concurrent findings of fact. In revisional
jurisdiction under Section 397 read with Section 401 of CrPC, re-
appreciation of evidence for coming to a contrary conclusion is not
permitted as clarified in State Vs. Manimaran (2019) 13 SCC 670,
where the Hon'ble Supreme Court has held as under:
"16. As held in State of Kerala V. Puttumana Illath Jathavedan
Namboodiri (1999) 2 SCC 452, ordinarily it would not be
appropriate for the High Court to reappreciate the evidence
and come to its own conclusion on the same when the
evidence has already been appreciated by the Magistrate as
well as by the Sessions Court in appeal. When the courts
below recorded the concurrent findings of fact, in our view,
the High Court was not right in interfering with the concurrent
findings of fact arrived at by the courts below and the
impugned order cannot be sustained."
(emphasis supplied)
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14. Admittedly, the Revision Applicant has not denied the
signature on the disputed cheque. Therefore, the presumption under
Section 118 read with Section 139 of NI Act applies with full force. The
presumption is rebuttable by considering preponderance of
probabilities. Useful reference can be made to Basalingappa Vs.
Mudibasppa (Supra), where Hon'ble Supreme Court has observed as
under.
“25. We having noticed the ratio laid down by this Court in the above
cases on Sections 118(a) and 139, we now summarise the principles
enumerated by this Court in following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act
mandates a presumption that the cheque was for the discharge of any
debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption
and the onus is on the accused to raise the probable defence. The
standard of proof for rebutting the presumption is that of preponderance
of probabilities.
25.3. xxx
25.4. xxx
25.5. xxx”
(emphasis supplied)
15. Star argument of learned counsel for Revision Applicant is that
the ingredients of Section 138 are not fulfilled inasmuch as the cheque
was issued in the name of Vijay O. Gandhi but it was deposited in the
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account of Vijay Industries and dishonour memo is in the name of Vijay
Industries and therefore the statutory chain is broken. Record shows
that cheque was drawn in favour of Vijay O. Gandhi. In this respect, the
Complainant has examined the bank employee of the concerned bank
(Mr. Mushtakali M. Sayyad) who is serving as Junior Manager in the
concerned Bank. This witness has stated that the reason for dishonour is
mentioned in the memo as ‘referred to drawer’. This witness has
specifically stated in the cross-examination (which is obviously at the
instance of question asked by Advocate of the Accused) that the cheque
in question was credited in the account of Vijay Gandhi and not in the
account of Vijay Industry. This aspect is considered by the learned
Magistrate. It is held that the cheque was deposited in the account of
the complainant Vijay Gandhi who is payee and demand notice is also
issued by complainant Vijay Gandhi i.e. payee of the cheque. It is
important to note that the Accused himself has brought on record (by
asking question to the Complainant in cross-examination) that the
transaction relating to the cheque was in the name of Vijay Industries. If
that be so then this argument needs no further consideration.
16. So far as the submission that the Complainant has no financial
capacity because he himself faced an action under Section 138 of NI Act
for dishonour of cheque of Rs.1,00,000/- issued in favour of a third
party (Dhananjay Modak), it is necessary to note that during cross-
examination, the Accused himself by asking question, has brought it on
record that the said case was withdrawn by the said third party. In
cross-examination, the Accused himself by asking question to
Complainant has brought this on record that Rs.2,50,000 was already
with him at house and amount of Rs.3,50,000 to Rs.4,00,000 was
obtained from brother and remaining amount was withdrawn from the
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bank. This evidence of the Complainant has been considered by the
Courts below to reject the argument about financial capacity. In that
view of the matter, I see no merit in the argument about Complainant
not having financial capacity. Just because a third party had filed
proceedings under Section 138 against the Complainant for a small
amount, which complaint was withdrawn, there is no reason to doubt
financial capacity. In this respect, in Ashok Singh V/s. State of Uttar
Pradesh and another 2025 SCC OnLine SC 706. The Hon'ble Supreme
Court, while considering the case under Section 138 of NI Act, has held
that onus is not on the Complainant ‘at the threshold’ to prove his
financial capacity. However if objection is raised then the complainant
would have to bring material in support of his financial capacity. I have
perused the notice reply issued on behalf of the Revision Applicant-
Accused (Exh. 42). In the said notice reply, no objections was raised
about financial capacity. Nothing is brought to the notice of this Court
that such objection about financial capacity was specifically raised in
the notice reply.
17. So far as the argument of there is no clearing stamp of the
bank and no bank endorsement, I have perused the copy of Cheque
Exh. 22, return memo issued by the Bank Exh. 24, which clearly
indicates that the memo is issued using printed bank slip having
signature of the chequer/Asst. Accountant issued on 13.02.2002. In that
view of the matter, submissions about bank endorsements, which are
clearly in the realm of re-appreciation of evidence, cannot be
considered.
18. So far as the argument that ‘uncertainty has been admitted by
the witness about their being no clearing stamp or bank endorsement’,
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it is material to note that the Bank witness has not admitted such
uncertainty. Admission, if at all, is given by the Complainant. The
complainant can not either confirm or reject about bank clearing
stamps and endorsements. Once the bank employee has supported the
case of cheque dishonour, the argument about such alleged uncertainty,
cannot be held as fatal.
19. The alleged inconsistency about purpose of loan (for business
or for bungalow) is not fatal for the purpose of considering rebuttal of
presumption. Assuming that the cheque is issued for any purpose, the
same still remains legal debt for the purpose of Section 138 of NI.
20. The argument about Trial/Appellate Court not applying
judicial mind and passing order in mechanical manner is misconceived.
Perusal of the judgments of the learned Magistrate as well as learned
Sessions Judge, indicates that the material on record has been
considered properly.
21. The argument about delay in deposit of cheque is irrelevant.
Cheque has a validity period and in present case, cheque dated
04.02.2002 is deposited on 12.02.2002. Therefore it has no material
bearing on the issue at hand. What is relevant is Petitioner/Accused
himself has lodged complaint on 13.02.2002 about alleged loss of
cheque on 10.02.2002.
22. The argument about violation of Income Tax law and illegal
cash transaction needs no further consideration because it is no more
res integra. The Division Bench in Prakash Madhukarrao Desai Versus
Dattatraya Sheshrao Desai (2023) 5 Mh.L.J.709 (Chandurkar & Joshi
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JJ) held that :
“18. In view of the aforesaid discussion, it is held that a
transaction not reflected in the books of account and/or
Income-tax returns of the holder of the cheque in due
course can be permitted to be enforced by instituting
proceedings under section 138 of the Act of 1881 in view
of the presumption under section 139 of the Act of 1881
that such cheque was issued by the drawer for the
discharge of any debt or other liability, execution of the
cheque being admitted. Violation of section 269SS
and/or section 271AAD of the Act of 1961 would not
render the transaction unenforceable under section 138
of the Act of 1881.”
(emphasis supplied)
23. The Judgment of M.S. Narayana Menon (Supra) is relied upon
contending that the Accused has discharged the burden and therefore,
the the Complainant must prove the case. Perusal of the said judgment
clearly indicates that the Hon'ble Supreme Court has considered
relevant sections of The Indian Evidence Act and has clarified that for
rebuttal of presumption under NI Act, what is needed is to raise a
probable defence. The Hon'ble Supreme Court has also clarified that if
the defence is proved to have discharged initial onus showing that
existence of consideration is improbable or doubtful, then the onus
would shift upon the complainant. In the present case, the defence
raised by the Accused is not consistent in the first place. In one breath,
the Applicant Accused has taken a stand that said cheque was lost and
in another breath, he has said that the cheque was stolen and misused
by the Complainant. Therefore, the said judgment will not apply in
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principle, because the Applicant/Accused has not proved the probable
defence in the present case.
24. In Milind Shripad Chandurkar (Supra), relied upon by the
Petitioner, the Hon'ble Supreme Court has held that the complainant
cannot claim to be payee of the cheque, nor holder in due course unless
he establishes that cheque has been issued to him or in his favour or
that he is sole proprietor of the firm.
In the facts of the present case, it has come on record that
cheque in question was credited in account of payee Mr. Vijay
Gandhi, which is so admitted by the Bank witness. Also the
Accused himself has brought on record by asking question to
the Complainant in the cross-examination that the transaction
relating to the cheque was in the name of Vijay Industries. In
that view of the matter, sufficient nexus is proved between the
payee and the firm. Therefore, the said judgment will also not
apply in principle. For the same reason, even the judgment of
Xavier William (Supra) will not apply to the facts of the
present case.
25. In the facts of Rajendraprasad Porwal (Supra) is relied upon
by the Petitioner, the cheque was dishonoured due to stoppage of
payment and not due to deficiency of funds. In the peculiar facts of that
case, learned Single Judge of this Court has set aside the conviction and
the complaint was dismissed. In this respect, it is material to note that
the Hon'ble Supreme Court in Laxmi Dyechem (Supra) has clearly held
that the contingencies envisaged under Section 138 of the NI Act, must
be interpreted strictly or literally. It is also held that insufficiency of
funds is ‘a genus’ and reasons such as ‘account closed, payment stopped
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or refer to drawer’ are only species of that genus. In that view of the
matter, Rajendraprasad Porwal (Supra) will not help the Petitioner.
26. In the aforesaid facts and circumstances and for the reasons
indicated above, no perversity is found in the impugned order. The view
taken by the Courts below is the most probable view. There is no reason
to interfere.
27. The Revision Application is accordingly dismissed. Rule is
discharged. The Applicant's bail bond/surety, if any, stands cancelled.
Applicant is granted 3 weeks’ time to surrender.
28. After 3 weeks, the Respondent/ Complainant is at liberty to
realize bank guarantee and withdraw amounts deposited by the
Applicant either in this Court or in the concerned Session Court or in
the concerned Magistrate Court, along with accrued interest, if any.
Pending Interim Application is disposed of in above terms.
29. All concerned to act on duly authenticated or digitally signed
QR verifiable copy of this order.
(M.M. SATHAYE, J.)
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