Gujarat High Court
Pranav Chandrakant Shah vs Parafulbhai Shivlal Patel on 4 November, 2025
NEUTRAL CITATION
R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL APPEAL NO. 1254 of 2011
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE S.V. PINTO Sd/-
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Approved for Reporting Yes No
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PRANAV CHANDRAKANT SHAH
Versus
PARAFULBHAI SHIVLAL PATEL & ANR.
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Appearance:
MR DIPEN K DAVE(3296) for the Appellant(s) No. 1
MR LAXMANSINH M ZALA(5787) for the Appellant(s) No. 1
MR TEJAS P SATTA(3149) for the Opponent(s)/Respondent(s) No. 1
MS C.M.SHAH, APP for the Opponent(s)/Respondent(s) No. 2
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CORAM:HONOURABLE MS. JUSTICE S.V. PINTO
Date : 04/11/2025
ORAL JUDGMENT
1. This appeal has been filed by the appellant - original complainant under Section 378(1)(3) of the Code of Criminal Procedure, 1973 (hereinafter referred to as 'the Code') against the judgment and the order passed by the learned 3 rd Additional Sessions Judge, Surendranagar (hereinafter referred to as 'the Page 1 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined learned Appellate Court') in Criminal Appeal No. 15 of 2011 dated 28.07.2011, whereby, the learned Appellate Court has quashed and set aside the judgment and order of conviction passed by the learned Additional Chief Judicial Magistrate, Surendranagar, (hereinafter referred to as 'the learned Trial Court) in Criminal Case No. 37 of 2010 dated 28.02.2011, whereby, the learned Trial Court had convicted and sentenced the respondent no. 1 - original accused to simple imprisonment for one year and fine of Rs.25,000/- (Rs. Twenty Five Thousand Only) and in default, simple imprisonment for two months for the offence punishable under Section 138 of the Negotiable Instruments Act (hereinafter referred to as 'the N.I.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 relevant facts leading to filing of the present appeal are as under:
2.1. The complainant is a financial consultant residing at Surendranagar and having an office at Ahmedabad. The Page 2 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined accused was known to the complainant as he would meet the complainant for business advice and the accused had proposed that the complainant prepare a project report for a bank loan.
Accordingly, a consultancy agreement was executed between them on 01.11.2006 and according to the agreement, the accused had to pay an amount of Rs.15,00,000/- as consultancy fee. Towards the same, the accused issued cheque no.165941 and cheque no.165942 dated 11.12.2007 of Rs.5,00,000/- each from his account with the Ahmedabad District Cooperative Bank, Narayanpura, Ahmedabad Branch. Out of both the cheques, cheque no. 165941 dated 11.12.2007 for Rs.5,00,000/- was deposited by the complainant in his account with Axis Bank, Surendranagar Branch, but the cheque returned unpaid with the endorsement "Today's Opening Balance Insufficient". The demand statutory notice was given, which was duly served to the accused and the accused gave an evasive reply to the notice but did not pay-up the amount within the stipulated period, and hence, the complainant filed a complaint under Section 138 of the N.I.Act before the court of the Chief Judicial Magistrate, Surendranagar, which came to be registered as Criminal Case Page 3 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined No.37 of 2010 (New number) [(Criminal Case No.515 of 2008) (old number)]
3. The learned Trial Court took cognizance of the offence and the accused was duly served with the summons and appeared before the learned Trial Court and the plea of the accused was recorded at Exh.15, wherein, the accused denied all the contents of the complaint and the entire evidence of the complainant was taken on record. The complainant was examined at Exh.18 and 09 documentary evidences were produced in support of the case.
3.1. After the closing pursis was filed by the learned advocate for the complainant at Exh.52, the further statement of the accused under Section 313 of the Code was recorded wherein the accused denied the evidence on record. The accused refused to step into the witness box and depose on oath and further stated that there was no legally enforceable due amount to be paid to the complainant. The accused examined witness Rajbahadur Ramlok Chauhan, the partner of Prime Agro Industries and witness Mr. Prakash Madhiyan, Bank Officer of Page 4 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined Vijaya Bank and produced three documentary evidences in support of his case. After hearing the arguments of the learned advocates for both the parties, the learned Trial Court, by the impugned judgment and order dated 28.02.2011, was pleased to convict and sentence the accused to simple imprisonment for one year and fine of Rs.25,000/- and in default, simple imprisonment of one month for the offence punishable under Section 138 of the N.I.Act.
3.2. Being aggrieved and dissatisfied with the judgment and order passed by the learned Trial Court, the accused preferred Criminal Appeal No.15 of 2011 before the Sessions Court, Surendranagar, whereby, the appeal preferred by the accused came to be allowed and the learned 3 rd Additional District Judge, Surendranagar quashed and set aside the judgment and order dated 28.02.2011 passed in Criminal Case No. 37 of 2010 by the learned Additional Chief Judicial Magistrate, Surendranagar.
4. Being aggrieved and dissatisfied with the judgment and order of acquittal passed by the learned Sessions Court, Page 5 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined Surendranagar, the appellant - original complainant has filed the present appeal mainly stating that the learned Sessions Court has erred in appreciating the evidence produced by the appellant and has wrongly passed the impugned judgment and order of acquittal without applying judicial mind. The judgment and order is against the provisions of the Negotiable Instruments Act and the learned Sessions Court has totally misinterpreted the provisions of the N.I.Act. The learned Sessions Court has not considered that the respondent no.2 could not raise any probable defense during the trial and the legal presumption under Sections 139 and 118 of the N.I.Act could not be rebutted. The respondent no.1 has not challenged the signature on any document produced by the appellant and the defense witnesses have corroborated the version of the complainant in the cross-examination. The learned Sessions Court has failed to consider the legal presumption and has misconceived in re-appreciation of the evidence of the learned Trial Court. The impugned judgment and order of acquittal is bad in law and the appeal may be allowed and the judgment and order of the learned Sessions Court be quashed and set Page 6 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined aside and the judgment passed by the learned Trial Court in Criminal Case No. 37 of 2010 be confirmed and made absolute.
5. Heard learned advocate Mr. Devansh Kakkad for learned advocate Mr.L.M.Zala for the appellant - original complainant, learned advocate Mr. Tejas Satta for the respondent no.1 and learned APP Ms. C.M.Shah for the respondent No.2 - State. Perused the impugned judgment and order of acquittal passed by the Appellate Court as well as judgment and order of conviction passed by the learned Trial Court and have re-appreciated the entire evidence of the prosecution on record of the case.
6. Learned Advocate Mr. Devansh Kakkad for the appellant has taken this court through the entire evidence of the appellant on record of the Trial Court and has submitted that the appellant was engaged by the respondent no.1 and his partner Rajbahadur for preparing a project report to get a loan sanctioned from the bank and these facts were admitted by the partner who has been examined as a witness before the learned Trial Court by the respondent no.1. The project report is also Page 7 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined produced on record at Exh.66 and the loan sanction letter issued by Vijaya Bank, Surendranagar is also produced on record at Exh.67. Both the documents prove that the appellant had prepared the project report and the loan was sanctioned by the bank and as the respondent no.1 has not disputed the signature on the relevant documents, the learned Trial Court had rightly convicted the respondent no.1 for the offence under Section 138 of the Negotiable Instruments Act. The learned Sessions Court has reverted the findings of the learned Trial Court and has acquitted the respondent no.1 without assigning any legal and valid reasons and has observed that the appellant had initiated criminal proceedings instead of taking a civil remedy available under the law. The learned Sessions Court has not assigned any reasons as to in what manner the legal presumption has been rebutted by the respondent no.1 and learned advocate Mr. Devansh Kakkad has urged this court to allow the appeal and set aside the judgment and order of acquittal passed by the learned Sessions Court and confirm the judgment and order of conviction passed by the learned Trial Court.
7. Learned Advocate Mr.Tejas Satta for the respondent Page 8 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined no.1 has submitted that the learned Sessions Court, upon a detailed examination of the oral and documentary evidence available on record, has concluded that the basic and essential ingredients for establishing the offence under Section 138 of the N.I.Act were not proved by the appellant and has specifically held that the appellant had failed to establish that the cheque in question was issued in discharge of any legally enforceable debt or liability. The findings arrived at by the learned Trial Court clearly shows that the presumptions available under Section 118 and 139 of the N.I.Act were duly rebutted by the respondent no.1 by leading cogent and reliable evidence, and consequently, the burden had shifted back on the appellant, but the appellant had failed to discharge the same. In the cross- examination, the appellant has admitted that the agreement produced at Exh.21 did not contain any clause indicating the payment of fees or commission by the respondent no.1 and has admitted that he never received any written communication or formal sanction letter from the bank confirming the approval of the loan. These admissions on the part of the appellant strike at the root of the appellant's case as they go to show that there was Page 9 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined neither any established professional engagement nor any evidence of successful execution of the alleged loan facilitation. The appellant has come with a case that the cheque was issued by the respondent no.1 in consideration of the processing fees or commission for arranging the bank loan; however, the assertion is not backed by any binding document, quantified invoice, acknowledgement or agreement. The documents produced by the appellant are vague and lack specific terms or acknowledgement of liability by the respondent no.1 and in the absence of any evidence establishing the legal obligation on the part of the respondent no.1 to pay any amount as fees, the issuance of cheque alone cannot be treated as conclusive proof of liability. Learned advocate has further submitted that in fact the respondent no.1 has successfully rebutted the statutory presumption under Sections 118 and 139 of the N.I.Act by leading positive evidence and has examined defence witness Mr. Rajbahadur Chauhan, a partner in Prime Agro Industries and Mr. Prakash Madhiyan, Bank Officer of Vijaya Bank. The defence raised by the respondent no.1 is not a bold denial, but rather a probable and consistent narrative backed by Page 10 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined independent witnesses and documentary evidence. Moreover, the appellant has himself admitted that he is a practicing Chartered Accountant and as per the Code of Ethics of the Institute of Chartered Accountants of India, in Clause 10 of Part-1 of the First Schedule of the Chartered Accountants Act, 1949, a Chartered Accountant is strictly prohibited from accepting any professional fees on a contingent or percentage basis. Such fee arrangements are unethical and illegal and even if the cheque was issued for such an arrangement, the same cannot constitute a legally enforceable debt in the eyes of law. Moreover, the appellant has not produced on record any document to prove that the respondent no.1 was acting as a Managing Executive of the partnership firm, M/s Prime Agro Industries, in relation to whose affairs the disputed cheque is alleged to have been issued. No documentary evidence such as a partnership deed, firm resolution, letter of authority or any formal appointment document has been placed on record by the appellant to prove that the respondent no.1 was holding any official position in the said firm and in the absence of any documentary evidence, the averment of the appellant is wholly unsubstantiated. The Page 11 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined appellant has not produced any documentary evidence to establish that any professional services such as preparation of project reports or loan documents were actually rendered by him in relation to the respondent no.1 and has utterly failed to prove that there existed any legally enforceable liability or debt of the respondent no.1 as required in the Section 138 of the N.I.Act. Learned advocate further submits that there is no iota of evidence of any legally enforceable debt or liability and the presumptions under Sections 118 and 139 of the N.I.Act stand rebutted. The conduct of the appellant amounts to professional misconduct and vitiates the enforceability of the alleged transaction and the learned Appellate Court has rightly appreciated the evidence and arrived at a just conclusion. The impugned judgment and order is not perverse or arbitrary and deserves to be upheld and learned advocate has urged this Court to dismiss the present appeal.
8. Learned APP Ms.C.M.Shah for the respondent no.2 has submitted that the learned Sessions Court has appreciated all the evidence in true perspective and has not committed any error in acquitting the respondent and no interference of this Page 12 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined court is required in the impugned judgment and order of acquittal and has urged this court to reject the appeal.
9. On perusal of the evidence produced on record of the learned Trial Court, the complainant has stated that he is a Chartered Accountant and the accused had approached him for preparing a project report for a bank loan. The complainant has filed his affidavit of examination-in-chief Exh.18 and in the cross- examination by the learned advocate for the accused, the complainant has stated that he resides at Surendranagar in a rented premises and the accused had met him first at Ahmedabad. The accused had told him that the loan was to be taken in the name of "Prime Agro Industries" and the accused was a guarantor of "Prime Agro Industries" but was not an owner or partner of the loan. The accused has produced a letter at Exh.21 and has stated that the document produced at Exh.21 does not mention the word 'contract' and he had not produced the Loan Project Report that he had prepared on record of the case. As per the document produced at Exh.21, 15% of the loan amount was to be taken as a fee and the complainant has produced the letter of Vijaya Bank Industrial Finance Branch, Page 13 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined Ahmedabad, addressed to M/s Prime Agro Industries, Ahmedabad, stating that an amount of Rs.97,00,000/- was sanctioned as per the terms and conditions mentioned in the document. The complainant has also admitted that he did not produce any evidence on record to show that the bank had credited the amount of loan in the account of the accused or in the account of Prime Agro Industries, as the accused did not fulfill the condition of repaying the loan amount taken from Vijaya Bank and had sent a letter to Vijaya Bank stating that they wish to withdraw the sanction limit due to personal disputes among the partners. The letter of Prime Agro Industries addressed to Assistant General Manager, Vijaya Bank, Industrial Finance Branch, Ahmedabad is produced at Exh.28. The complainant has also admitted that the document produced at Exh.25 does not state that three cheques were given as the loan was sanctioned to Prime Agro Industries.
9.1. After the evidence of the complainant was closed, the further statement of the accused under Section 313 of the Code of Criminal Procedure was recorded wherein the accused stated that he had given blank cheques to the complainant for Page 14 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined his personal loan and he had sent a reply to the notice and the complainant did not prepare any loan project for him but had misused his cheques. The accused refused to step into the witness box but stated that he wanted to examine witnesses on his behalf and has examined Defence Witness No. 1 Rajbahadur Ramlok Chauhan at Exh.62. The witness who is a partner of Prime Agro Industries has stated that he had contacted the complainant to prepare a Loan Project Report and had given an amount of Rs.2,50,000/- as fees towards the loan but the complainant did not prepare the Loan Project Report which was in the name of Prime Agro Industries. The witness has stated that the accused was not a partner of any firm with him and has admitted that a letter was given to Vijaya Bank withdrawing the sanctioned loan. The letter of Vijaya Bank, Industrial Finance Branch, Ahmedabad dated 23.12.2006 to M/s. Prime Agro Industries, Ahmedabad stating that advances were sanctioned to Prime Agro Industries subject to the terms and conditions is produced at Exh. 26.
10. On appreciation of the evidence on record, it is the case of the complainant that the accused had approached him to Page 15 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined prepare a Loan Project Report for taking a loan of about Rs.1,00,00,000/- from Vijaya Bank and the loan was to be taken by of Prime Agro Industries, but there is no document on record to show that the accused was the partner of Prime Agro Industries. The complainant has mainly relied on the document produced at Exh.21, which is a letter dated 01.11.2006 written by the complainant addressed to the accused with C/o Prime Agro Industries stating that for the preparation of the Project Report or Loan Proposal, 15% of the loan amount shall be the consultation fees. Hence, it is the case of the complainant that the amount of 15% of the loan amount was to be taken as consultation fees, but there is no document on record to show that the complainant had in fact prepared any Loan Project Report and had submitted the same on behalf of Prime Agro Industries to any bank. Moreover, there is nothing on record to suggest that the accused was a partner of Prime Agro Industries and if the document produced at Exh.21 is perused, it does not contain any clause indicating the payment of fees by the accused. The complainant has admitted that he did not receive any formal written communication regarding sanction of the Page 16 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined loan from any bank. There is no document on record to show that there was any contract between the parties that the complainant had to prepare the project report and that the project report was in fact prepared by the complainant. The document at Exh.67 and Exh.68 do not mention that the documents were in fact prepared by the complainant and the name of the complainant does not appear in any of the documents including the Loan Proposal Report. Moreover, Defence Witness No.1 Rajbahadur Chauhan examined at Exh.62 has stated that he had engaged the complainant for preparing the Loan Proposal Report and had paid an amount of Rs.2,50,000/- to the complainant but the said fact has not been challenged by the complainant in the cross-examination. The witness Rajbahadur Chauhan is the partner of Prime Agro Industries and he has stated that the complainant did not prepare the Loan Project Report and by the evidence of the Defence Witnesses Rajbahadur Chauhan at Exh.62 and witness Prakashbhai Hainan Mendon at Exh.64, the accused has successfully rebutted the presumption.
11. At this juncture, it would be fit to reproduce the Page 17 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined 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 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."Page 18 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025
NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined 11.1 As per the settled principles of the N.I.Act, Sections 118 and 139 of the N.I.Act provide for presumptions to be raised in favour of the complainant but the presumptions are raised until the contrary is proved and the court may presume that a fact is proved until and unless it is disproved. The accused has to rebut the statutory presumption and it is not expected that the accused rebuts the presumption to prove his defence beyond reasonable doubt, as a complainant in a criminal trial but the accused has to bring on record something probable for getting the onus shifted back on the complainant.
12. In light of the above, the observations of the Apex court in Kumar Exports Vs. Sharma Carpets reported in 2008(0) AIJEL-SC 42685, in Para 9 to 11, are reproduced as under:
"9. In order to determine the question whether offence punishable under Section 138 of the Act is made out against the appellant, it will be necessary to examine the scope and ambit of presumptions to be raised as envisaged by the provisions of Sections 118 and 139 of the Act. In a suit to enforce a simple contract, the plaintiff has to aver in his pleading that it was made for good consideration and must substantiate it by evidence. But to this rule, the negotiable instruments are an exception. In a significant departure from the general rule applicable to contracts, Section 118 of the Act provides certain presumptions to be raised. This Section lays down some special rules of evidence relating to presumptions. The reason for these presumptions is that, Page 19 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined negotiable instrument passes from hand to hand on endorsement and it would make trading very difficult and negotiability of the instrument impossible, unless certain presumptions are made. The presumption, therefore, is a matter of principle to facilitate negotiability as well as trade. Section 118 of the Act provides presumptions to be raised until the contrary is proved (i) as to consideration, (ii) as to date of instrument, (iii) as to time of acceptance, (iv) as to time of transfer, (v) as to order of endorsements, (vi) as to appropriate stamp and (vii) as to holder being a holder in due course. Section 139 of the Act provides that 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. Presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the Indian Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) "may presume"
(rebuttable), (2) "shall presume" (rebuttable) and (3) "conclusive presumptions" (irrebuttable). The term 'presumption' is used to designate an inference, affirmative or disaffirmative of the existence a fact, conveniently called the "presumed fact" drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence to the satisfaction of the tribunal. Presumption literally means "taking as true without examination or proof". Section 4 of the Evidence Act inter-alia defines the words 'may presume' and 'shall presume as follows: -
"(a) 'may presume' - Whenever it is provided by this Act that the Court may presume a fact, it may either regard such fact as proved, unless and until it is disproved or may call for proof of it.
(b) 'shall presume' - Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved."
In the former case the Court has an option to raise the presumption or not, but in the latter case, the Court must necessarily raise the presumption. If in a case the Court has an option to raise the presumption and raises the presumption, the distinction between the two categories of presumptions ceases and the fact is presumed, unless and until it is disproved.
10. Section 118 of the Act inter alia directs that it shall be Page 20 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 of the Act stipulates that unless the contrary is proved, it shall be presumed, that the holder of the cheque received the cheque, for the discharge of, whole or part of any debt or liability. Applying the definition of the word 'proved' in Section 3 of the Evidence Act to the provisions of Sections 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the cheque was not issued for consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists.
11. The use of the phrase "until the contrary is proved" in Section 118 of the Act and use of the words "unless the contrary is proved" in Section 139 of the Act read with definitions of "may presume" and "shall presume" as given in Section 4 of the Evidence Act, makes it at once clear that presumptions to be raised under both the provisions are rebuttable. When a presumption is rebuttable, it only points out that the party on whom lies the duty of going forward with evidence, on the fact presumed and when that party has produced evidence fairly and reasonably tending to show that the real fact is not as presumed, the purpose of the presumption is over. The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non- existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove Page 21 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act. The accused has also an option to prove the non-existence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue.
12.1 With regard to the presumption under the N.I.Act, the Apex Court in Krishna Janardhan Bhatt Vs. Dattatreya G. Hegde reported in 2008(0) AIJEL-SC 40338, has in Para Nos. 20 to 26 observed as under:
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NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined "20. Indisputably, a mandatory presumption is required to be raised in terms of Section 118(b) and Section 139 of the Act.
Section 13(1) of the Act defines negotiable instrument to mean a promissory note, bill of exchange or cheque payable either to order or to bearer"
Section 138 of the Act has three ingredients, viz.:
(i) that there is a legally enforceable debt;
(ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which pre- supposes a legally enforceable debt; and
(iii) that the cheque so issued had been returned due to insufficiency of funds.
21. The proviso appended to the said Section provides for compliance of legal requirements before a complaint petition can be acted upon by a court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability.
22. The courts below, as noticed herein before, proceeded on the basis that Section 139 raises a presumption in regard to existence of a debt also. The courts below, in our opinion, committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden. Such an approach on the part of the courts, we feel, is not correct.
23. An accused for discharging the burden of proof placed upon him under a statute need not examine himself. He may discharge his burden on the basis of the materials already brought on records. An accused has a constitutional right to maintain silence. Standard of proof on the part of an accused and that of the prosecution in a criminal case is different.
24. In Bharat Barrel & Drum Manufacturing Company v. Amin Chand Payrelal [(1999) 3 SCC 35] interpreting Section 118(a) of the Act, this Court opined:
"Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption Page 23 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined under Section 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non- existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non- existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt.
[Emphasis supplied]
25. Furthermore, whereas prosecution must prove the guilt of an accused beyond all reasonable doubt, the standard of proof so as to prove a defence on the part of an accused is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials brought on records by the parties but also by reference to the circumstances upon which he relies.
26. A statutory presumption has an evidentiary value. The question as to whether the presumption whether stood rebutted or not, must, therefore, be determined keeping in view the other evidences on record. For the said purpose, stepping into the witness box by the appellant is not imperative. In a case of this nature, where the chances of false implication cannot be ruled out, the background fact and the conduct of the parties together with their legal requirements are required to be taken into consideration."
13. In light of the above settled principles of law, if the Page 24 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined entire evidence of the appellant is perused on record of the learned Trial Court, it is the say of the appellant that the accused had engaged him to prepare the Loan Proposal Report for M/s. Prime Agro Industries, but there is no evidence that the accused was a partner of M/s. Prime Agro Industries and had entered into any contract to prepare any Loan Project Report for M/s. Prime Agro Industries and that there was a legal obligation on the respondent no.1 to pay the amount of cheque as fees to the appellant. If the cheque produced on record is perused, the cheque is from the personal account of the accused and the cheque is not of M/s. Prime Agro Industries. Moreover, as per the document produced at Exh.68, an amount of Rs.97,00,000/- was sanctioned as loan to M/s. Prime Agro Industries and the document at Exh.21 which is the letter of the complainant to the accused C/o M/s. Prime Agro Industries states that 5% of the fees shall be payable at the time of sanction of the proposal, but the cheque is for Rs.5,00,000/- which is not 5% of the amounts of loan sanctioned. Defense Witness No.1 Rajbahadur Chauhan examined at Exh.62 who is a partner of M/s. Prime Agro Industries has categorically stated that he had paid an amount of Page 25 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined Rs.2,50,000/- as fee to the complainant, but no clarification regarding the same has been produced on record. There is no evidence that the amount of Rs.5,00,000/- was a legally enforceable debt due from the accused and by the evidence of Defence Witness Rajbahadur Chauhan and Defense Witness Prakashbhai Hainan Mendon, a probable defence by the evidence of independent witnesses and backed by documentary evidence is produced and the presumption under Sections 118 and 139 of the N.I.Act stand rebutted.
14. In view of the above, the learned Appellate Court has appreciated the entire evidence in proper perspective and there does not appear to be any infirmity and illegality in the impugned judgment and order of acquittal. The learned Appellate Court has appreciated all the evidence and this Court is of the considered opinion that the learned Appellate Court was completely justified in acquitting the accused of the charges leveled against them. The findings recorded by the learned Appellate Court are absolutely just and proper and no illegality or infirmity has been committed by the learned First Appellate Court and this Court is in complete agreement with the findings, Page 26 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025 NEUTRAL CITATION R/CR.A/1254/2011 JUDGMENT DATED: 04/11/2025 undefined ultimate conclusion and the resultant order of acquittal recorded by the learned Appellate Court. This Court finds no reason to interfere with the impugned judgment and order passed by the learned Appellate Court and the present appeal is devoid of merits and resultantly, the same is dismissed.
15. The impugned judgment and the order dated 28.07.2011 in Criminal Appeal No.15 of 2011 passed by the learned 3rd Additional Sessions Judge, Surendranagar is hereby confirmed.
16. Bail bond stands cancelled. Record and proceedings be sent back to the learned First Appellate Court forthwith.
Sd/-
(S. V. PINTO,J) F.S. KAZI Page 27 of 27 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:32 IST 2025