Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Guj) 1806

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
S.V. PINTO, J.
Nitin Vrujlal Kakkad - Appellant
Versus
State Of Gujarat & Anr. - Respondent
Criminal Appeal No. 9 of 2012
Decided On : 04-11-2025

Advocates:
Advocate Appeared: For the Appellant :Manan K Paneri, Mr Devansh N Kakkad For the Respondent: Mr Riddhesh Trivedi, Ms C.M.Shah, APP

The court held that failure to prove a legally enforceable debt invalidates a cheque under Section 138 of the Negotiable Instruments Act.

Headnote:(A) Code of Criminal Procedure, 1973 - Section 378(1)(3) - Negotiable Instruments Act, 1881 - Section 138 - Appeal against acquittal - Appellants claimed that the cheque issued as payment for a legally enforceable liability was dishonored - Respondent argued no legally enforceable debt existed due to previous accusations and lacks of evidence - Learned Appellate Court acquitted Respondent, ruling no legally enforceable debt was existing; Appellants failed to substantiate claim of compromise. (Paras 1.1, 14)

(B) Evidence - Burden of proof lies on the complainant under Section 138 to prove issuance against legally enforceable debt; Respondent successfully rebutted presumption of debt with alternate facts. (Paras 9, 13)

Facts of the case:
Appellant alleged issuance of a cheque by Respondent for repayment of an earlier debt, later contested by accusations of security issuance instead; dismissals of evidence undermined original claims.

Findings of Court:
There was no substantial evidence presented for an enforceable debt; acquittal warranted as per the evidence on record.

Issues: Determining legally enforceable debt existed; presumption under NI Act rebutted by evidence of absence of legal obligation.

Ratio Decidendi: Court explicitly stated complainants must furnish credible evidence of debt during Section 138 proceedings for liability to rest on the accused, reaffirming the burden of proof in such cases.

Result: Appeal was dismissed.

Table of Content
1. court reviews the appeal and prior judgments. (Para 1 , 3 , 5)
2. overview of facts surrounding the transaction and cheque issuance. (Para 2)
3. arguments by both sides regarding the enforcement of debt. (Para 4 , 6 , 8)
4. analysis of evidence and legal standards for presumption of debts. (Para 10 , 11 , 12)
5. conclusion affirming acquittal based on lack of substantiated evidence. (Para 14 , 15 , 16)

JUDGMENT :

S.V. PINTO, J.

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 5^th Additional District Judge, Rajkot (hereinafter referred to as ‘the learned Appellate Court’) in Criminal Appeal No. 13 of 2011 dated 31.05.2011, whereby, the learned Appellate Court has quashed and set aside the judgment and order of conviction passed by the learned 11th Additional Chief Judicial Magistrate, Rajkot, (hereinafter referred to as ‘the learned Trial Court) in Criminal Case No. 3744 of 2005 dated 17.02.2011, whereby, the learned Trial Court convicted and sentenced the respondent no.2 to undergo simple imprisonment for six months and to pay an amount of Rs.35,000/- (Rupees Thirty Five Thousand Only) as compensation to the appellant within a period of one month and in default, simple imprisonment for 45 days 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 and the accused were relatives and the accused was the owner of Flat No.4 situated on the first floor of “Gaurav Apartment’ on Kalavad Road, Rajkot having a built up area of 450 square feet. The complainant wanted to purchase the flat and a registered agreement to sell was executed between the parties and the complainant had paid an amount of Rs.70,000/- as earnest money to the accused by two cheques. The remaining amount was also paid in cash, but the accused did not hand over possession of the flat to the complainant and did not get the registered sale deed executed in favour of the complainant. The accused sold the flat to some other person and had also taken a loan on the flat and as the registered sale deed could not be executed, a compromise was arrived at between the parties and the market value of the flat was fixed at Rs.3,85,000/-. Towards the compromise amount, two cheques were given by the accused to the complainant, out of which, cheque no. 0184582 for Rs.35,000/- dated 08.02.2005 from his account with Rajkot Nagarik Sarkari Bank Limited, Dr. Yagnik Road Branch, Rajkot was deposited by the complainant in his account, but the cheque returned unpaid. On contacting the accused, the complainant was asked to deposit the cheque once again and when the cheque was deposited once again, it returned unpaid with the endorsement “Funds Insufficient”. The demand statutory notice was given which was duly served to the accused and the accused gave an evasive reply, but did not repay 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 Rajkot on 11.04.2005, which came to be registered as Criminal Case No. 3744 of 2005.

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. The plea of the accused was recorded at Exh.9, 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.10 and he produced 10 documentary evidences in support of the case.

2.3. After the clo