TaxTMI 
TaxTMI 
2026 (8) TMI 589
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....dge 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 writ....
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....l 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 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 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 Tri....
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.... The contrary finding is wholly erroneous. Learned counsel for the appellant has relied upon 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 disc....
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....sion 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 respondent No. 2 personally accepted the Trust's liability ....
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....t 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 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. ....
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....nant 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....
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....nsider 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. 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 ....
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....f 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 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." ....
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....ned 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 cheque 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 th....
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....prietor 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: 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 ....
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....d 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 personal loan taken by First Party) (b) 50,000 (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 Thousand Rupees 12,50,000 (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 Chari....
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.... (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 Road, Nadiad - 387001 Email : [email protected], 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. T....
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.... 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 prese....
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....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 Trust, as the charge of the Trust had subsequently been taken over by the newly induc....
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....he 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) 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....
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....able to punishment if he proves that the offence was 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 individu....
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....espondent 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 othe....
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....bt 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 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 w....
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....e, 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....
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.... 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 Co....
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.... 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 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 bere....
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.... 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 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, ther....