Gujarat High Court
Pranav Chandrakant Shah vs Prafulbhai Shivlal Patel on 4 November, 2025
NEUTRAL CITATION
R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL APPEAL NO. 1255 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
PRAFULBHAI 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 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined learned Appellate Court') in Criminal Appeal No. 16 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. 38 of 2010 dated 28.02.2011, whereby, the learned Trial Court convicted and sentenced the 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 Page 2 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined Surendranagar and having an office at Ahmedabad. The 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 as per 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 dated 11.12.2007 and cheque no.165942 dated 11.12.2007 for Rs.5,00,000/- each from his account with the Ahmedabad District Cooperative Bank, Narayanpura, Ahmedabad Branch. Out of both the cheques, cheque no. 165942 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 Page 3 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined Judicial Magistrate, Surendranagar, which came to be registered as Criminal Case No.38 of 2010.
2.2. 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 the complainant produced 09 documentary evidences in support of the case. 2.3. After the closing pursis was filed by the learned advocate for the complainant at Exh.55, the further statement of the accused under Section 313 of the Code was recorded wherein the accused denied the evidence on record. The accused stated that the cheque was given for a personal loan and he has given a reply to the notice. The accused refused to step into the witness box but examined witnesses Rajbahadur Chauhan and Prakashbhai Mendon and produced three documentary evidences in support of his case. Page 4 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025
NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined 2.4. 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/- (Rupees Twnety Five Thousand Only) in default, simple imprisonment for two months for the offence punishable under Section 138 of the N.I.Act.
3. Being aggrieved and dissatisfied with the impugned judgment and order passed by the learned Trial Court, the accused preferred Criminal Appeal No.16 of 2011 before the Sessions Court, Surendranagar, whereby, the appeal preferred by the accused came to be allowed and the learned 3rd Additional Sessions Judge, Surendranagar quashed and set aside the judgment and order dated 28.02.2011 passed in Criminal Case No. 38 of 2010 by the learned Additional Chief Judicial Magistrate, Surendranagar and acquitted the accsued from the offence.
4. Being aggrieved and dissatisfied with the impugned judgment and order passed by the learned Appellate Court, in Page 5 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined the Criminal Appeal No. 16 of 2011, the appellant - original complainant has filed the present appeal mainly stating that the impugned judgment and order passed by the Appellate Court is ex-facie, illegal, arbitrary and without properly appreciating the facts of the case and the materials available on record. The learned Appellate Court has a committed jurisdictional error while passing the impugned order. The Appellate Court ought to have appreciated that the learned Additional Chief Judicial Magistrate had given proper and cogent reasons and had discussed the evidence in details while convicting the respondent no.1. The Appellate Court ought to have appreciated that the witnesses that were examined by the respondent no.1 were all interested witnesses and their evidence was not reliable and from their evidence, the defence of the respondent no.1 was not proved, and therefore, the order of acquittal passed by the learned Appellate Court is required to be quashed and set aside.
5. Heard learned advocate Mr. Devansh Kakkad for learned advocate Mr.L.M.Zala for the appellant - original Page 6 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined complainant, learned advocate Mr. Tejas Satta for the respondent no.1 - original accused and learned APP Ms. C.M.Shah for the respondent No.2- State. Perused the impugned judgment and order of acquittal passed by the learned 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 appellant 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 Chauhan 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 produced on record at Exh.67 and the loan sanction letter issued by Vijaya Bank, Surendranagar is also produced on record at Exh.68. Both the documents prove that the appellant had prepared the project report and the loan was sanctioned by the Page 7 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined 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 reversed 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 under Section 118 and Section 139 of the N.I.Act 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 impugned judgment and order of acquittal passed by the learned Appellate Court and confirm the judgment and order of conviction passed by the learned Trial Court.
7. Learned Advocate Mr.Tejas Satta for the respondent no.1 has submitted that the learned Sessions Court, upon a detailed examination of the oral and documentary evidence Page 8 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined 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 show that the presumption available under Section 118 and Section 139 of the N.I.Act was 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 document 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 neither any established professional engagement nor any evidence of successful execution of the alleged loan facilitation. Page 9 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025
NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined 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, the issuance of cheque alone cannot be treated as conclusive proof of liability. Learned advocate has further submitted that the respondent no.1 has successfully rebutted the statutory presumption under Section 118 and Section 139 of the N.I.Act by leading positive evidence and has examined defence witness Mr. Rajbahadur Chauhan, a partner if M/s. Prime Agro Industries and Mr. Prakash Mendon, the 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 independent witnesses and documentary evidence. Moreover, the appellant has himself admitted that he is a practicing Chartered Accountant and as Page 10 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined 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 appellant has not produced any documentary evidence to establish that any professional services such as preparation of Page 11 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined 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 Section 118 and Section 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 Sessions Court has rightly appreciated the evidence and arrived at a just conclusion. The impugned judgment and order of the learned Appellate Court 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 - State 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 Page 12 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined interference of this 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 filed his affidavit of examination-in-chief at Exh.18 and has reiterated the contents of the complaint and has stated that the accused had engaged him to prepare a Bank Loan Project Report and the contract for the consultancy was executed between them on 01.11.2006. As per the contract, the accused had to pay an amount of Rs.15,00,000/- as consultancy fee towards which cheque no.165941 and cheque no.165942 both dated 11.12.2007 for Rs.5,00,000/- each were Mendon issued. The complainant had prepared the Bank Loan Project and Vijaya Bank, Ahmedabad had sanctioned the loan on 23.12.2006 as per the proposal. Cheque no.165942 dated 11.12.2007 of Rs.5,00,000/- from the account of the accused with the Ahmedabad District Co-operative Bank, Narayanpura Branch was deposited by the complainant in his account with Axis Bank, Surendranagar Branch, but the cheque returned Page 13 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined unpaid with the endorsement "Today's Opening Balance Insufficient". The demand statutory notice was given, and thereafter, the complaint was filed as the amount was not repaid within the stipulated period.
9.1. In the cross-examination by the learned advocate for the accused, the complainant has stated that the accused had come to his office and he had prepared the loan project for the accused, but he has not produced any evidence regarding the loan project on record. The document at Exh.21, which is the letter, was prepared at his office and the signature of the accused was taken at his office. In the document produced at Exh.25, it is stated that the accused had given three cheque of Rs.5,00,000/- each on 27.01.2007, but it is not mentioned that the cheques were for the Loan Project Proposal of M/s. Prime Agro Industries. The complainant has not produced any documentary evidence to show that the accused had signed as a guarantor in the loan of M/s. Prime Agro Industries and he is doing the business in the name of Chartered Financial Services and he had prepared the loan proposal on behalf of Chartered Page 14 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined Financial Services. The document produced does not mention that the proposal was prepared by the complainant. 9.2. The complainant has produced the cheque at Exh.19, the return memo at Exh.20, a letter written by the accused to the complainant at Exh.21, the demand statutory notice at Exh.22, the registered post acknowledgement at Exh.23, the reply to the notice given by the accused at Exh.24 and a letter from the accused and Raj Bahadur Chauhan, the partner of M/s. Prime Agro Industries written to the complainant on the letterhead of M/s. Prime Agro Industries at Exh.25.
9.3. During the cross examination of the complainant, the accused has produced the sanction letter of Vijaya Bank Industrial Finance Branch, Ahmedabad dated 23 12 2006 at Exh.29 and a letter written by M/s. Prime Agro Industries to the Assistant General Manager, Vijaya Bank Industrial Finance Branch, Ahmedabad stating that they are withdrawing the sanction due to personal disputes among the partners and have requested the bank to withdraw the same at Exh.30. Page 15 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025
NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined 9.4. 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 dated 23.12.2006 to M/s. Prime Agro Industries, Ahmedabad at Exh.29, which states that Working Capital Fund based Cash Credit (mortgage) Rs.30,00,000/-, Non Fund based Bank Guarantee Rs.10,00,000/-, Term Loan Mortgage loan Rs.37,00,000/- and secured loan of Rs.20,00,000/- and in all an amount of Rs.97,00,000/- was sanctioned as per the terms and conditions mentioned in the document. By the letter dated 27.01.2007 produced at Exh.30, the credit proposal was withdrawn and there is no evidence that the bank had credited the amount of loan in the account of the accused or in the account of M/s. Prime Agro Industries. As per the document produced by the complainant at Exh.21, 5% of the fees was to be payable at the time of sanction of the proposal, 5% was to payable at the first disbursement of the loan and remaining 5% was payable at the time of the second disbursement of the loan and in that manner 15 percent of the loan account amount sanctioned was to be given, but there is no iota of evidence that Page 16 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined any amount any of the sanctioned amount was actually disbursed.
9.5. After the closing pursis was filed by the complainant, the further statement of the accused under Section 313 of the Code of Criminal Procedure was recorded, wherein the accused denied all the evidence and stated that the document produced at Exh.18 is false and he had given a reply to the notice. The accused has stated that he had never given any work of preparing a loan project to the complainant and the complainant has never prepared any loan project, but the cheques were given by him towards a personal loan. The accused refused to step into the witness box, but stated that he wanted to examine witnesses and examined Defence Witness No. Rajbahadur Rambakshi Chauhan at Exh.61 and Defence Witness no.2 Prakashbhai Mendon at Exh.63. Defence Witness no.1 Rajbahadur Rambakshi Chauhan, was the partner of M/s. Prime Agro Industries and he has stated that he had given the work of preparing the loan project report to the complainant and had paid an amount of Rs.2,50,000/- in parts as fees, but the Page 17 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined complainant did not prepare the loan project report till date. The accused was never a partner in any business with him and in the cross examination, the witness has stated that the complainant was contacted for the loan, but he has stated that the Manager was transferred and the loan proposal would be placed before the new Manager. Defence witness no.2 Prakashbhai Mendon examined at Exh.63, was the Branch Manager of Vijaya Bank and he has produced the loan project report and has stated that the document does not bear the name of the complainant. The credit proposal of M/s. Prime Agro Industries is produced at Exh.66 by the witness.
10. On appreciation of the evidence on record, it is the case of the complainant that the accused had approached him to 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 in the name of M/s. Prime Agro Industries, but there is no document on record to show that the accused was a partner of M/s. Prime Agro Industries. The complainant has mainly relied on the document produced at Exh.21, which is a letter dated Page 18 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined 01.11.2006 written by the complainant to the accused addressed at C/o M/s. Prime Agro Industries stating that for the project report of 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 agreement and had submitted the same on behalf of M/s. Prime Agro Industries to any bank. Moreover, there is nothing on record to suggest that the accused was the partner of M/s. 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 and the complainant has admitted that he did not receive any formal written communication regarding sanction of the 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.66 and Exh.67 do not mention that the documents were in fact prepared by the complainant and the Page 19 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined name of the complainant does not appear in any of the documents including the loan proposal form. Moreover, Defence Witness No.1 Rajbahadur Chauhan examined at Exh.62 has stated that he had engaged the complainant for preparing the loan proposal project 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 is a partner of M/s. 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 Prakashbhai Mendon at Exh.64, the accused has successfully rebutted the presumption. It is an admitted fact that no loan amount was disbursed by Vijaya Bank in favour of M/s. Prime Agro Industries or the accused as the loan sanctioned was withdrawn by the partners of M/s. Prime Agro Industries.
111. At this juncture, it would be fit to reproduce the provisions of Section 118 and Section 139 of the Negotiable Instruments Act which read as under.
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NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined "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."
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 Page 21 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined 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. At this juncture it would be fit to reproduce the observations of the Apex court in Kumar Exports Vs. Sharma Carpets reported in 2008(0) AIJEL-SC 42685, wherein para 9 to para 11, the Apex Court has observed 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. 8 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, negotiable instrument passes from hand to hand on endorsement and it would make trading very difficult and negotiability of the instrument impossible, unless certain Page 22 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined 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 9 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 presumed, until the contrary is proved, that every negotiable instrument was made or drawn for consideration. Section 139 Page 23 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined 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 11 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 12 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 13 case that the accused should disprove the non-existence of consideration and debt by Page 24 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined 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 14 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, in paras 20 to 26, has observed as under:
Page 25 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025
NEUTRAL CITATION R/CR.A/1255/2011 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 Page 26 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined execution of the promissory note is admitted, the presumption 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." Page 27 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025
NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined
13. In light of the above settled principles of law, if the 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 a loan proposal project report for M/s. Prime Agro Industries, but there is no evidence that the accused was a partner of M/s. Prime Agro Industries. If the cheque produced on record is perused, the cheque is from the personal account of the accused and the cheque is not from the account 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 the 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 and 5% of the fees shall be payable at the time of first disbursement of the loan, but the cheque is for Rs.5,00,000/- which is not 5% of the amounts of loan sanctioned and there is no evidence that any amount was disbursed by Vijaya Bank to M/s. Prime Agro Industries or the accused. Moreover, Defence Witness No.1 Rajbahadur Chauhan examined at Exh.62 who is the partner of Page 28 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined M/s. Prime Agro Industries has categorically stated that he had paid an amount of 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 the legally enforceable debt due from the accused and by the evidence of Defense Witness Rajbahadur Chauhan and Defense Witness Prakashbhai Mendon, the accused has raied a probable defence and the presumption under Section 118 and Section 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 him. The findings recorded by the learned Appellate Court are absolutely just and proper and no illegality or infirmity has been committed by the learned Appellate Court Page 29 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025 NEUTRAL CITATION R/CR.A/1255/2011 JUDGMENT DATED: 04/11/2025 undefined and this Court is in complete agreement with the findings, 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.
14. The impugned judgment and the order dated 28.07.2011 in Criminal Appeal No.16 of 2011 passed by the learned 3rd Additional Sessions Judge, Surendranagar is hereby confirmed.
15. Bail bond stands cancelled. Record and proceedings be sent back to the concerned Court forthwith.
Sd/-
(S. V. PINTO,J) F.S. KAZI Page 30 of 30 Uploaded by F.S. KAZI(HC01075) on Mon Nov 24 2025 Downloaded on : Fri Nov 28 21:24:37 IST 2025