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2026 Supreme(Online)(Guj) 8529

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Sanjeev J. Thaker, J
Harshadbhai Himmatbhai Joshi – Appellant
Versus
State – Respondent
R/CRIMINAL APPEAL NO. 683 of 2007

Advocates:
For the Appellants/Petitioners: Jayant P. Bhatt
For the Respondents: Harnish V. Darji, Megha Chitaliya

A conviction for dishonour of a cheque requires the instrument to be issued in discharge of a legally enforceable debt. When a complainant’s own evidence identifies a purpose for the cheque inconsistent with the alleged debt, the statutory presumption of liability is effectively rebutted.

Headnote:(A) Negotiable Instruments Act, 1881 - Sections 138 and 139 - Code of Criminal Procedure, 1973 - Section 378 - Dishonour of cheque - Legally enforceable debt - Burden of proof - Presumption of liability - Appellate interference - Where a complainant claims a cheque was issued for a loan, but subsequently admits during cross-examination that the instrument was intended for a distinct, different purpose, the foundational requirement of a legally enforceable debt is compromised - Section 139 provides for a presumption of debt, yet such a presumption operates only upon the existence of a valid underlying liability - Appellate courts exercise limited jurisdiction in appeals against acquittal, restricting intervention to cases of perversity, manifest illegality, or total disregard for material evidence. (Paras 8.4, 8.6, 8.7, 9.1)

Facts of the case:
The complainant initiated legal proceedings following the dishonour of a cheque, alleging it was issued in repayment of a friendly loan. However, during trial, the complainant admitted that the instrument was actually furnished as a refund for a registration fee paid to a service bureau. The trial court acquitted the respondent based on these contradictory testimonies and the inability to establish a clear debt liability.

Findings of Court:
The appellate court concluded that the trial court was justified in its acquittal as the complainant's own admissions negated the existence of the claimed debt. The evidentiary record did not support the contention of a loan, and therefore, the statutory presumption regarding liability was effectively rebutted.

Issues: Whether the cheque was issued in discharge of an alleged, legally enforceable loan and whether the trial court's order of acquittal was based on an erroneous or perverse appreciation of evidence.

Ratio Decidendi: The court maintained that for an offence regarding a dishonoured cheque to be substantiated, the instrument must be issued in discharge of a concrete debt or liability. Since the complainant’s own testimony demonstrated the instrument did not correspond to the claimed loan, the prosecution failed to prove its case. The court reiterated that it will not substitute its findings for valid conclusions reached by a trial court unless the decision is clearly perverse or flawed.

Result: Appeal dismissed.

Table of Content
1. procedural background and factual context of the section 138 ni act dispute. (Para 1 , 2 , 3 , 4 , 5)
2. summary of rival contentions regarding trial court evaluation and evidence reliability. (Para 6 , 7)
3. assessment of evidence inconsistencies regarding the nature of the alleged debt. (Para 8)
4. standards for appellate interference and final dismissal of the criminal appeal. (Para 9 , 10 , 11 , 12)

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE SANJEEV J.THAKER

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Approved for Reporting

Yes

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CAV JUDGMENT

1. Feeling aggrieved by and dissatisfied with the judgment and order of acquittal dated 06.03.2006, passed by the learned 6th Joint Judicial Magistrate, First Class at Gandhinagar in Criminal Case No.1878 of 2004, for the offence punishable under Section 138 of the Negotiable Instruments Act, the appellant – original complainant has preferred this appeal under Section 378 of the Code of Criminal Procedure, 1973 (for short, “the Code”).

2. The brief facts leading to filing of this appeal are such that the complaint is filed by the complainant to the effect that the complainant is running his livelihood from the amount of pension; that the accused used to come to his house as he was of the same caste and friend and therefore, there were friendly relations between them; that before sometime, the accused had stated that as there is financial loss in the business and he needed money, he asked the complainant to lend a friendly loan of Rs.2,00,000/- and that he will return the same within sometime. That, the complainant trusted the accused and lent him Rs.2,00,000/- as a friendly loan and after sometime, as the complainant asked for returning the said amount, the accused gave a cheque dated 22.01.2004 drawn on the Ahmedabad Mercantile Cooperative Bank Ltd., Ambawadi Branch, Ahmedabad, for an amount of Rs.2,00,000/- bearing Cheque No.125600; but on presentation of the said cheque for clearance, the same was dishonoured with an endorsement `balance insufficient’. Therefore, the complainant sent a statutory notice to the accused through the advocate, and although the same was received by the accused, the accused did not pay any amount to the complainant and therefore, the complaint was filed by the complainant.

3. Considering the verification of the complainant and the documents, the complaint was registered, the accused was called for by serving the summons, the accused remained present before the Court, and he was provided with the complaint and the documents. On recording the statement of the accused, he pleaded not guilty and claimed to be tried.

4. In order to prove the case, the following documentary evidence has been produced before the trial Court, which are described in the impugned judgment, which are as under :

Sr.No.	Particulars	Exh. No.
1	Deposition of the Complainant – Harshadbhai H. Joshi	15
2	List of Documentary Evidence	16
3	Original Cheque of Rs.2,00,000/- drawn on the Ahmedabad Mercantile Coop. Bank Ltd., Ambawadi Branch, Ahmedabad	17
4	Return Cheque Memo of the accused’s bank	18
5	Return Cheque Memo of the complainant’s bank	19
6	Notice issued through the advocate	20
7	White Acknowledgement Receipt of the Post	21
8	Acknowledgement	22
9	Slip U.P.C.	23
10	Brown Cover	32
11	Authority given to Ashwin Shah by the Manager of the Ahmedabad Mercantile Coop. Bank Ltd.	33
12	Letter showing the details of issuance of Cheque No.125600 Pankaj B. Bhatt’s Account No.8604, date and reasons for return the cheque	34
13	Bank statement of the accused’s bank i.e. Ahmedabad Mercantile Coop. Bank Ltd.	35
14	Closing Purshis	37

5. After hearing both the parties and after analysis of evidence adduced by the complainant, the learned trial Judge acquitted the accused for the offence as alleged, by holding that the complainant has failed to prove the case beyond reasonab

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2026 Supreme(Online)(Guj) 8529

IN THE HIGH COURT OF GUJARAT AT AHMEDABADSanjeev J. Thaker, JHarshadbhai Himmatbhai Joshi – AppellantVersusState – RespondentR/CRIMINAL APPEAL NO. 683 of 2007

A conviction for dishonour of a cheque requires the instrument to be issued in discharge of a legally enforceable debt. When a complainant’s own evidence identifies a purpose for the cheque inconsistent with the alleged debt, the statutory presumption of liability is effectively rebutted.

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Sanjeev J. Thaker, J
Harshadbhai Himmatbhai Joshi – Appellant
Versus
State – Respondent
R/CRIMINAL APPEAL NO. 683 of 2007