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2025 DIGILAW 449 (GUJ)

Regent Granito (India) Ltd. v. State of Gujarat

2025-06-13

S.V.PINTO

body2025
JUDGMENT : S.V. PINTO, J. 1. The present appeal is filed by the appellant – original complainant under Section 378 of the Code of Criminal Procedure, 1973 (for short “Cr.P.C.”) an appeal against the judgment and order dated 25.02.2010 passed by the learned Judicial Magistrate First Class, Sabarkantha at Himmatnagar (hereinafter referred to as the “learned Trial Court”) in Criminal Case No. 3629 of 2006, whereby the respondent No. 2 - original accused came to be acquitted from the offence under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘the NI Act”). 1.1 The parties are hereinafter referred to as “the complainant” and “the accused” as they stood in the original case for the sake of convenience, clarity and brevity. 2. The brief facts culled out from the memo of the present appeal as well as the impugned judgment and order and paper book filed by the complainant are as under: 2.1. The complainant filed a complaint against the accused under Section 138 of the Act, as the accused had purchased goods of Rs. 6,00,000/- from the complainant and the accused issued cheque No.199835 for the amount of Rs.6,00,000/- dated 15.06.2006 from his account with Allahabad Bank, SSI Finance Branch-3, Gandhinagar. The complainant deposited the cheque on 16.10.2006 in his account with UTI Bank Ltd, Himmatnagar, but the cheque was dishonored and the reason mentioned in the return memo dated 26.10.2006 was “Funds Insufficient”. The complainant sent the statutory demand notice to the accused on 01.11.2006 by U.P.C. and R.P.A.D. which was served on 08.11.2006, but no payment was made by the accused. The complainant filed a criminal complaint before the Court of the Chief Judicial Magistrate, Sabarkantha at Himmatnagar under Section 138 of the N I Act, 1881 which was registered as Criminal Case no. 3629 of 2006. 2.2 The accused was served with the summons and appeared before the learned Trial Court and his plea was recorded at Exh.29 and the evidence of the complainant was taken on record. The complainant and one witness were examined on oath and 12 documentary evidences were produced in support of his case and after the closing pursis was filed, the further statement of the accused under Section 313 of the Code of Criminal Procedure was recorded. The complainant and one witness were examined on oath and 12 documentary evidences were produced in support of his case and after the closing pursis was filed, the further statement of the accused under Section 313 of the Code of Criminal Procedure was recorded. The accused refused to stepped into the witness box and after the evidence of the accused was closed the arguments of the learned advocates for both the parties were heard and by the impugned judgment and order, the learned Trial Court acquitted the accused from the offence under Section 138 of the NI Act. 3. Being aggrieved and dissatisfied with the same, the appellant has preferred the present appeal mainly stating that the learned Trial Court has not properly interpreted the evidence and has misread the evidence and the impugned judgment is perverse, erroneous and contrary to law. 4. Heard learned advocate Mr. Monark Pandya for learned advocate Mr. Hriday Buch appearing for the appellant and learned APP Ms. Jirga Jhaveri for the respondent – State. 5. Learned Advocate Mr. Monark Pandya for the appellant submits that the learned Trial Court has not appreciated that the complainant has successfully established that the cheque in question was issued by the accused from the bank account maintained by him. The complainant has proved that the cheque was written by the accused and it was dishonoured and as the complainant is the holder in due course of the cheque in question the statutory presumption under Section 139 of the N I Act is to be drawn in favour of the complainant. The learned Trial Court has not appreciated the provisions of Section 118 and 138 of the NI Act in proper perspective. The fact of the goods given by the complainant to the accused is also not negated, but the learned Trial Court has disbelieved the same. The accused had failed to rebut the presumption and hence the judgement and order of acquittal is bad in law and the appeal must be allowed. 6. Learned APP Ms. Jirga Jhaveri for the respondent – State has submitted that the learned Trial Court has appreciated all the evidence in detail in light of the citations referred to in the judgement and has passed the judgement and order of acquittal which is proper and no interference is required and hence the appeal must be rejected. 7. 6. Learned APP Ms. Jirga Jhaveri for the respondent – State has submitted that the learned Trial Court has appreciated all the evidence in detail in light of the citations referred to in the judgement and has passed the judgement and order of acquittal which is proper and no interference is required and hence the appeal must be rejected. 7. With regard to the facts in the present case, it would be fit to refer to the observations regarding acquittal appeals made the Apex Court in the case of Constable 907 Surendra Singh & Anr. Vs. State of Uttarakhand, 2025 0 INSC 1 14 which are reproduced as under: “11. Recently, in the case of Babu Sahebagouda Rudragoudar and others v. State of Karnataka , (2024) 8 SCC 149 a Bench of this Court to which one of us was a Member (B.R. Gavai, J.) had an occasion to consider the legal position with regard to the scope of interference in an appeal against acquittal. It was observed thus: “38. First of all, we would like to reiterate the principles laid down by this Court governing the scope of interference by the High Court in an appeal filed by the State for challenging acquittal of the accused recorded by the trial court. 39. This Court in Rajesh Prasad v. State of Bihar , (2022) 3 SCC 471 : (2022) 2 SCC (Cri) 31 encapsulated the legal position covering the field after considering various earlier judgments and held as below : (SCC pp. 482-83, para 29) “29. After referring to a catena of judgments, this Court culled out the following general principles regarding the powers of the appellate court while dealing with an appeal against an order of acquittal in the following words : [ Chandrappa v. State of Karnataka , (2007) 4 SCC 415 : (2007) 2 SCC (Cri) 325 , SCC p. 432, para 42] ‘42. From the above decisions, in our considered view, the following general principles regarding powers of the appellate court while dealing with an appeal against an order of acquittal emerge: (1) An appellate court has full power to review, reappreciate and reconsider the evidence upon which the order of acquittal is founded. From the above decisions, in our considered view, the following general principles regarding powers of the appellate court while dealing with an appeal against an order of acquittal emerge: (1) An appellate court has full power to review, reappreciate and reconsider the evidence upon which the order of acquittal is founded. (2) The CRIMINAL PROCEDURE CODE , 1973 puts no limitation, restriction or condition on exercise of such power and an appellate court on the evidence before it may reach its own conclusion, both on questions of fact and of law. (3) Various expressions, such as, “substantial and compelling reasons”, “good and sufficient grounds”, “very strong circumstances”, “distorted conclusions”, “glaring mistakes”, etc. are not intended to curtail extensive powers of an appellate court in an appeal against acquittal. Such phraseologies are more in the nature of “flourishes of language” to emphasise the reluctance of an appellate court to interfere with acquittal than to curtail the power of the court to review the evidence and to come to its own conclusion. (4) An appellate court, however, must bear in mind that in case of acquittal, there is double presumption in favour of the accused. Firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the trial court. (5) If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court.’ ” 40. Further, in H.D. Sundara v. State of Karnataka , (2023) 9 SCC 581 : (2023) 3 SCC (Cri) 748 this Court summarised the principles governing the exercise of appellate jurisdiction while dealing with an appeal against acquittal under Section 378 CrPC as follows : (SCC p. 584, para 8) “8. … 8.1. The acquittal of the accused further strengthens the presumption of innocence; 8.2. The appellate court, while hearing an appeal against acquittal, is entitled to reappreciate the oral and documentary evidence; 8.3. … 8.1. The acquittal of the accused further strengthens the presumption of innocence; 8.2. The appellate court, while hearing an appeal against acquittal, is entitled to reappreciate the oral and documentary evidence; 8.3. The appellate court, while deciding an appeal against acquittal, after reappreciating the evidence, is required to consider whether the view taken by the trial court is a possible view which could have been taken on the basis of the evidence on record; 8.4. If the view taken is a possible view, the appellate court cannot overturn the order of acquittal on the ground that another view was also possible; and 8.5. The appellate court can interfere with the order of acquittal only if it comes to a finding that the only conclusion which can be recorded on the basis of the evidence on record was that the guilt of the accused was proved beyond a reasonable doubt and no other conclusion was possible.” 41. Thus, it is beyond the pale of doubt that the scope of interference by an appellate court for reversing the judgment of acquittal recorded by the trial court in favour of the accused has to be exercised within the four corners of the following principles: 41.1. That the judgment of acquittal suffers from patent perversity; 41.2. That the same is based on a misreading/omission to consider material evidence on record; and 41.3. That no two reasonable views are possible and only the view consistent with the guilt of the accused is possible from the evidence available on record.” 12. It could thus be seen that it is a settled legal position that the interference with the finding of acquittal recorded by the learned trial judge would be warranted by the High Court only if the judgment of acquittal suffers from patent perversity; that the same is based on a misreading/omission to consider material evidence on record; and that no two reasonable views are possible and only the view consistent with the guilt of the accused is possible from the evidence available on record.” 8. In light of the above settled principles of law in acquittal appeals the evidence of the complainant on record of the case is perused and the complainant has stepped into the witness box and has deposed on oath at Exh.39. In light of the above settled principles of law in acquittal appeals the evidence of the complainant on record of the case is perused and the complainant has stepped into the witness box and has deposed on oath at Exh.39. The complaint was filed by Prakashbhai Dahyabhai Patel, the authorised person of Regent Granito India Limited, but thereafter he left the company and the deposition was given by Ramanbhai Keshabhai Patel. During the cross-examination Ramanbhai Keshabhai Patel has admitted that they would take cheques as security from the parties and no evidence that goods were sent to the accused has been produced on record. Moreover, on 15.06.2006 an amount of Rs.15,62,778/- was outstanding as per the document produced at Exh.51 and an amount of Rs.3,00,000/- was deposited on 11.07.2006, Rs.50,000/- on 21.08.2006, Rs.1,00,000/- on 04.09.2006 and an amount of Rs.2,00,000/- was deposited by cheque No.384431 in the month of July, and in all an amount of Rs.6,50,000/- was paid by the accused, after the date of cheque. That in the complaint and notice sent to the accused the amount due is not mentioned. 8.1 In the documentary evidence of the complainant produced at Exh.39 an amount of Rs.15,62,748/- is shown outstanding whereas in the deposition of witness No.1 an amount of Rs.16,87,708/- is shown outstanding and it appears that there is no convincing evidence regarding the exact amount outstanding from the accused. Moreover, in the evidence it has also come on record that the accused has paid certain amounts including amount by cash after 15.06.2006 and there is no clarity from the complainant as to how the amount of cheque has been shown to be outstanding from the accused. 9. The observation of the Apex Court in Rangappa Vs. Sri Mohan , 2010 11 SCC 441 in para 14 are reproduced as under: “14. In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the accused/defendant cannot be expected to discharge an unduly high standard of proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139 , the standard of proof for doing so is that of ‘preponderance of probabilities. Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own.” 9.1 The Apex Court in the case of Basalingappa vs. Mudibasappa , 2019 0 AIR(SC) 1983 has observed in Para 23 and 28 as under: “23. We having noticed the ratio laid down by this Court in above cases on Sections 118 (a) and 139, we now summarise the principles enumerated by this Court in following manner: (i) Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability. (ii) The presumption Under Section 139 is a rebuttable presumption and the onus is on the Accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities. (iii) To rebut the presumption, it is open for the Accused to rely on evidence led by him or Accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely. (iv) That it is not necessary for the Accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden. (v) It is not necessary for the Accused to come in the witness box to support his defence. 24. xxxx 25. xxxx 26. xxxx 27. xxxx 28. We are of the view that when evidence was led before the Court to indicate that apart from loan of Rs. 6 lakhs given to the Accused, within 02 years, amount of Rs. 18 lakhs have been given out by the complainant and his financial capacity being questioned, it was incumbent on the complainant to have explained his financial capacity. Court cannot insist on a person to lead negative evidence.” 9.2 The Apex Court in the case of Dashrathbhai Trikambhai Patel vs. Hitesh Mahendrabhai Patel & Anr. 2023 1 SCC 578 has observed as under: “30. Court cannot insist on a person to lead negative evidence.” 9.2 The Apex Court in the case of Dashrathbhai Trikambhai Patel vs. Hitesh Mahendrabhai Patel & Anr. 2023 1 SCC 578 has observed as under: “30. In view of the discussion above, we summarise our findings below: (i) For the commission of an offence under Section 138 , the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation; (ii) If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque; (iii) When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act. The cheque endorsed with the payment made may be used to negotiate the balance, if any. If the cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the offence under Section 138 will stand attracted; (iv) The first respondent has made part-payments after the debt was incurred and before the cheque was encashed upon maturity. The sum of rupees twenty lakhs represented on the cheque was not the ‘legally enforceable debt’ on the date of maturity. Thus, the first respondent cannot be deemed to have committed an offence under Section 138 of the Act when the cheque was dishonoured for insufficient funds; (v) The notice demanding the payment of the ‘said amount of money’ has been interpreted by judgments of this Court to mean the cheque amount. The conditions stipulated in the provisos to Section 138 need to be fulfilled in addition to the ingredients in the substantive part of Section 138 . Since in this case, the first respondent has not committed an offence under Section 138 , the validity of the form of the notice need not be decided.” 9.3 The Apex Court in the case of M/s Naresh Potteries Vs. M/s Aarti Industries and Another , 2025 0 INSC 1 has observed in Para 19 as under. “19. Since in this case, the first respondent has not committed an offence under Section 138 , the validity of the form of the notice need not be decided.” 9.3 The Apex Court in the case of M/s Naresh Potteries Vs. M/s Aarti Industries and Another , 2025 0 INSC 1 has observed in Para 19 as under. “19. After discussing the discretionary powers of the Magistrate, this Court went on to hold that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the NI Act. This Court, however, cautioned that an exception to the above would be when the power-of-attorney holder does not have a personal knowledge about the transactions, in which case, he cannot be examined. Nevertheless, this Court clarified that where the power-of- attorney holder of the complainant is in charge of the business of the complainant payee and the power of attorney holder alone is personally aware of the transactions, there is no reason why he cannot depose as a witness, however, such personal knowledge must be explicitly asserted in the complaint and a power-of-attorney holder who has no personal knowledge of the transactions cannot be examined as a witness in the case.” 10. In light of the above settled principles of law and considering the arguments advanced by the learned advocates for the parties and on perusal of the record of the case it transpires that the amount mentioned in the cheque is Rs.6,00,000/- and the cheque is dated 15.06.2006 but the complainant has not produced any documentary evidence to show what was the amount that was due from the accused on 15.06.2006. During the cross-examination, two contradictory amounts i.e. Rs.15,62,748/- and Rs.16,87,708/- were shown to have been outstanding from the accused. Moreover, in the evidence during the cross-examination of the witnesses the accused has successfully rebutted the presumption and has brought on record that an amount of Rs.3,00,000/- was deposited on 11.07.2006, Rs.50,000/- on 21.08.2006, Rs.1,00,000/- on 04.09.2006 and an amount of Rs.2,00,000/- was deposited by cheque No.384431 in the month of July and in all an amount of Rs.6,50,000/- was paid by the accused after the date of cheque and the complainant has not explained the outstanding amount from the accused on the date of the cheque. 11. 11. The learned Trial Court has appreciated all the evidence produced by both the parties and has concluded that the complainant has not proved the exact amount due from the accused and the accused has successfully rebutted the presumption under Section 139 of the N I Act and had created a reasonable doubt during the cross examination in light of the judgment of the Apex Court in Rangappa(supra) and Basalingappa (supra). As per observation of Apex Court in the case of M/s Naresh Potteries(supra) the authorized power of attorney can file and proceed with the case if he has knowledge of transaction but in this case the witness Ramanbhai Keshabhai Patel who has deposed had no personal knowledge about the transaction. The complainant has failed to produce reliable and cogent evidence on record about the legally recoverable debt from the accused and the complainant has not proved his case beyond reasonable doubt and, in light of the observations of the Apex Court, the learned Trial Court has passed the impugned judgment and order of acquittal, which is just and proper and does not require any interference of this Court. 12. Consequently, the present appeal under Section 378 of the Code of Criminal Procedure, 1973 fails and is hereby dismissed. 13. Record and proceedings if any, be sent back to the learned Trial Court forthwith.