U/S 138 N.I. Act l Presumption of Debt Not Enough for Conviction: Gujarat High Court Upholds Acquittal in Cheque Dishonour Case

In a significant ruling, the Gujarat High Court, led by Honourable Mrs. Justice M. K. Thakker, upheld the acquittal of a respondent in a cheque dishonour case, emphasizing the importance of substantial evidence over mere presumption in cases involving Section 138 of the Negotiable Instruments Act.

The case, titled Nareshkumar LadhaJi Jat Versus State Of Gujarat, revolved around an appeal against the acquittal of the respondent accused of dishonouring a cheque worth Rs. 7 Lacs. The appellant had challenged the trial court’s decision, arguing that the presumption in favour of the holder of the cheque under Section 139 of the NI Act was not adequately considered.

Justice Thakker, in her judgment, stated, “The rebuttal does not have to conclusively establish but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reason-ability being that of a prudent man.” This observation highlighted the court’s stance on the necessity of tangible evidence over presumptive conclusions in legal proceedings.

The High Court delved deeply into the evidence and cross-examination records, scrutinizing the inconsistencies in the appellant’s claims and the lack of a written agreement or receipt to substantiate the alleged transaction. The judgment underscored the pivotal role of credible evidence in such cases, stating, “If the evidence, which was placed on the record, is considered then it transpires that it is consistent with the innocence of the accused which may reasonably be true, even though it is not possible to be true, the accused would entitle to be acquitted.”

The court also considered the respondent’s defence, which involved the circumstances of obtaining the cheque and the claim of an absence of a legally enforceable debt. The evidence provided by bank officials and a police investigation supported the respondent’s defence.

High Court dismissed the appeal, affirming the trial court’s decision and setting a precedent on the interpretation and application of the Negotiable Instruments Act. This decision reiterates the judiciary’s commitment to thorough examination and interpretation of evidence in legal proceedings, particularly in cases of financial disputes and cheque dishonour.

 Date of Decision: 09 November 2023

NARESHKUMAR LADHAJI JAT Versus STATE OF GUJARAT