High Court of Gujarat Allows Appeal Against Acquittal in Cheque Dishonour Case — Rebuttal of Presumption Under Section 139 NI Act Requires Evidence, Not Mere Denial. The court held that the presumption under Section 139 of the Negotiable Instruments Act, 1881, operates in favour of the complainant and the accused must rebut it with credible evidence, not mere suggestions.

High Court: Gujarat High Court In Favour of Prosecution

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2026-05-19 21:41:59

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Case Note & Summary

The appellant, Rajesh Darshanlal Gupta, filed a criminal appeal under Section 378 of the Code of Criminal Procedure, 1973, against the judgment and order of acquittal dated 11.01.2008 passed by the learned 13th Additional Senior Civil Judge and Judicial Magistrate (First Class), Vadodara, in Criminal Case No.3383 of 2001. The trial court had acquitted the respondents, Amivision (a partnership firm) and its partner Sanjay Narsinhdas Shroff, of the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The brief facts are that the respondent No.2, being a friend of the appellant, sought financial help in February 2007 and borrowed a sum of Rs.1,50,000/- from the appellant. To discharge the said liability, the respondent No.2 issued a cheque dated 30.04.2007 drawn on Bank of Baroda, Vadodara, in favour of the appellant. When the appellant presented the cheque for encashment, it was dishonoured with the endorsement 'Account Closed'. The appellant issued a statutory notice under Section 138 NI Act on 18.05.2007, which was received by the respondents but they failed to make payment within the stipulated period. Consequently, the appellant filed a complaint before the trial court. The trial court, after recording evidence, acquitted the respondents on the ground that the appellant failed to prove the existence of a legally enforceable debt or liability. The appellant challenged this acquittal. The High Court, after hearing the parties, allowed the appeal. The court held that the trial court had erred in its approach. The appellant had proved the execution of the cheque and the signature of the respondent No.2, which was not disputed. The presumption under Section 139 of the NI Act, that the cheque was issued for a debt or liability, was therefore attracted. The respondents merely denied the transaction in their statement under Section 313 CrPC but did not lead any evidence to rebut the presumption. The trial court's finding that the appellant failed to prove the debt was perverse and contrary to the evidence. The High Court set aside the acquittal and convicted the respondents under Section 138 NI Act. The respondent No.2 was sentenced to simple imprisonment for one year and ordered to pay compensation of Rs.1,50,000/- to the appellant, with default sentence of three months. The respondent No.1 firm was ordered to pay the compensation amount.

Headnote

A) Negotiable Instruments Act - Cheque Dishonour - Section 138 - Presumption under Section 139 - Rebuttal - The complainant proved the execution of the cheque and the existence of a debt/liability; the accused merely denied the transaction without leading any evidence. Held that the presumption under Section 139 NI Act operates in favour of the complainant and the accused must rebut it with credible evidence, not mere suggestions. (Paras 1-8)

B) Criminal Procedure Code - Appeal against Acquittal - Section 378 - Scope - The High Court can interfere with an acquittal if the trial court's findings are perverse or based on misappreciation of evidence. Held that the trial court's conclusion that the complainant failed to prove the debt was contrary to the evidence and the presumption under Section 139 NI Act. (Paras 1-8)

Issue of Consideration

Whether the trial court erred in acquitting the accused under Section 138 of the Negotiable Instruments Act, 1881, by improperly shifting the burden of proof and failing to appreciate that the presumption under Section 139 NI Act was not rebutted by the accused.

Final Decision

Appeal allowed. Judgment of acquittal dated 11.01.2008 passed by the learned 13th Additional Senior Civil Judge and Judicial Magistrate (First Class), Vadodara in Criminal Case No.3383 of 2001 is set aside. Respondent No.2 - Sanjay Narsinhdas Shroff is convicted for offence under Section 138 of the Negotiable Instruments Act, 1881 and sentenced to simple imprisonment for one year and to pay compensation of Rs.1,50,000/- to the appellant, in default to undergo simple imprisonment for three months. Respondent No.1 firm is ordered to pay compensation of Rs.1,50,000/- to the appellant.

Law Points

Presumption under Section 139 of Negotiable Instruments Act
1881
Rebuttal of presumption requires evidence
Section 138 NI Act
Section 378 CrPC appeal against acquittal
Standard of proof in cheque dishonour cases

Case Details

2026 LawText (GUJ) (01) 142

R/CRIMINAL APPEAL NO. 1962 of 2008

2026-01-19

Sanjeev J. Thaker

MR RI SHARMA, MR SS ACHARYA for the Appellant; MS SUDHA C SHUKLA for the Opponent(s)/Respondent(s) No. 2

Rajesh Darshanlal Gupta

Amivision A Partnership Firm & Anr.

Nature of Litigation

Criminal appeal against acquittal under Section 378 CrPC for offence under Section 138 NI Act

Remedy Sought

Appellant sought conviction of respondents for cheque dishonour and compensation

Filing Reason

Respondent No.2 borrowed Rs.1,50,000 from appellant in February 2007, issued cheque dated 30.04.2007 which was dishonoured with endorsement 'Account Closed'; statutory notice was served but payment not made

Previous Decisions

Trial court acquitted respondents on 11.01.2008 in Criminal Case No.3383 of 2001

Issues

Whether the trial court erred in acquitting the accused despite the presumption under Section 139 NI Act not being rebutted? Whether the appeal against acquittal under Section 378 CrPC is maintainable and the High Court can interfere?

Submissions/Arguments

Appellant argued that the trial court failed to appreciate the presumption under Section 139 NI Act and wrongly shifted the burden of proof Respondents argued that the appellant failed to prove the existence of a legally enforceable debt

Ratio Decidendi

The presumption under Section 139 of the Negotiable Instruments Act, 1881, that a cheque was issued for a debt or liability, operates in favour of the complainant once the execution of the cheque is proved. The accused must rebut this presumption with credible evidence; mere denial or suggestions in cross-examination are insufficient. The trial court's acquittal based on the complainant's failure to prove the debt was perverse and contrary to the evidence.

Judgment Excerpts

Feeling aggrieved by and dissatisfied with the judgment and order of acquittal dated 11.01.2008, passed by the learned 13th Additional Senior Civil Judge and Judicial Magistrate (First Class), Vadodara in Criminal Case No.3383 of 2001, 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. The brief facts leading to filing of this appeal are such that respondent No.2 – Sanjay Narsinhdas Shroff, who was the partner of respondent No.1 - Firm i.e. Amivision, was a friend of the appellant - complainant and as he was in need of funds, he sought financial help in February, 2007 from the complainant - present appellant

Procedural History

The appellant filed a complaint under Section 138 NI Act before the trial court (Criminal Case No.3383 of 2001). The trial court acquitted the respondents on 11.01.2008. The appellant then filed the present appeal under Section 378 CrPC before the High Court of Gujarat, which was allowed on 19.01.2026.