The appellate court upheld the acquittal of the respondent in the case of Ranjit Singh Sethi v. Abdul Jalil Shaikh Abdulla for the following reasons: 1. The respondent was able to provide evidence of periodic payments made to the complainant prior to the alleged date of loan, contradicting the complainant's claims. 2. The complainant failed to explain these prior transactions or provide proof of the alleged loan amount. 3. Based on the evidence and contradictions in the complainant's case, the appellate court determined the trial court was justified in finding reasonable doubt over the existence of a legally enforceable debt.

1. Ranjit Singh Sethi v. Abdul Jalil
Shaikh Abdulla
Citation- 2013 SCC OnLine Bom 153
Section(s) concerned- §§ 138, 139 of
The Negotiable Instruments Act, 1881

3. • The appellant had prosecuted the respondent on the allegation of having committed an
offence punishable u/s. 138 of the Negotiable Instruments Act.
• It was submitted by the complainant that:
- Respondent had a friendly relation with him as they knew each other for 12 to 13
years and had approached him for financial help of Rs. 98,000/- on 5 th August
2001.
- The complainant had issued a Demand Promissory Note for the requisite sum on
8th August 2001 as a friendly loan which the accused promised to repay on or
before 8th November 2001 i.e., on or before three months.
-The respondent had given a post dated cheque of 8 th November 2001 for the
sum of Rs. 98,000/- which was dishonored when deposited on 12th November
2001 due to ‘insufficient funds’.
- Thereafter, the respondent was served with the notice calling to pay the amount
but the appellant was not paid, leading to the filing of complaint u/s 138 NI Act
against the respondent

4. ACCUSED (at Trial Court)
• Accused(borrowed Rs. 40K)Complainant
• @ROI- 10% + Rs. 100 penalty/day for late payment
• Accused(contact through Newspaper Ad.)
Complainant
• Accused claimed Rs. 60K (towards Interest + principal)
paid; out of which Rs. 23,000/- was paid by cheque.
• Accused produced the passbook.

5. FINDINGS OF TRIAL COURT
• Complainant produced no counter to How he met accused;
failed to establish friendly relation for 10+ years as claimed
• The entries in the passbook showed some payments made by
the accused to the complainant which amounted to Rs.
25,300/-.
• The learned magistrate found no documentary evidence of
the payment of Rs. 98,000/- as a loan to the accused except
the cheque itself which was not sufficient to establish the
loan of Rs. 98,000/-.

6. FINDINGS OF TRIAL COURT(cont..)
• Complainant had failed to provide any explanations about the
purpose of payment of Rs. 25,300/- received from the accused.
• Further, the magistrate observed that the entries in the passbook
suggest that the payment was being made against the loan amount
provided by the complainant to the accused but the position
related to the date of loan stood unsettled as there were
transactions before 8th November 2001 (the due date) and also no
explanations were given by the complainant regarding the amount
he received from the accused in the year 1999-2000 and 2001.
• Accused held not liable.

7. At the COURT OF APPEAL
• Appellant/Complainant- “payments made by the
respondent was not made to the appellant but to
his wife and further payments which were made
prior to giving of the loan (before 8th August
2001) would stand irrelevant. “

8. Findings COURT OF APPEAL
• Explanation regarding the payment to his wife ought to be explained
• There was no proof regarding the date of the loan which was merely a claim and
not an admitted position.
• Transactions between the appellant and respondent during 1999 lead to an
inference that the real transaction between both the parties had not taken place
on 8th August 2001 as alleged by the complainant which was further solidified
by the initial non-disclosure of the transactions by the complainant and further
inability to explain the transactions brought on record by the accused-
respondent
• Appeal-court ought not to interfere in the acquittal if it is based on ‘possible
view’ taken by the magistrate after carefully and reasonably considering the
evidences. Hence, the order of acquittal was upheld by the court.

9. § 138 OF THE NEGOTIABLE
INSTRUMENTS ACT 1881

10. Essentials of the offence u/s 138 NI Act
1. The cheque for an amount is issued by the drawer to the payee / complainant on a bank account
maintained by him.
2. The said cheque is issued for the discharge, in whole or in part of any debt or other liability.
3. The cheque is returned by the bank unpaid on account of insufficient amount to honour the
cheque or it exceeds the amount arranged to be paid from that account by an agreement made
with the bank.
4. The cheque is presented within 3 months from the date on which it is drawn or within the period
of its validity.
5. 30 days demand notice is issued by the payee or the holder in due course on receipt of
information by him from the bank regarding the dishonour of the cheque.
6. The drawer of said cheque fails to make payment of the said amount of the money to the payee or
the holder on due course within 15 days of the said notice.
7. The debt or liability against which the cheque was issued is legally enforceable.

11. Analysis of Ranjit Singh Sethi
In Uttam Ram v. Devinder Singh Hudan, the respondent had procured packing material on credit from
the appellant, Uttam Ram, to carry apple crop bought from various growers. It was found that the
respondent owed money for which a cheque was issued. The cheque, however, bounced and the
appellant filed a complaint. Supreme Court held that the burden of proving the due amount
should not be on the complainant as if he has to prove a debt before a civil court. Rather, the
burden to rebut the presumption of debt in cheque bounce case under Section 138 of Negotiable
Instruments Act is on the accused.
In Tasneem Murshedkar Mazhar v. Ramesh (2020 SCC Bom), as per the complainant, she had given a
loan of Rs 4.5 lakhs to the accused, for repayment of which, he had issued a cheque in favour of
the complainant. However, on presenting the cheque for encashment, it was dishonoured. Per
contra, the accused took the stand that the cheque in question was given to one Sanjay, who was a
former business partner of the accused.

12. The cheque was given to Sanjay to be handed over to a third party to connect with a mutually agreed
transaction. However, subsequently, disputes arose between the accused and Sanjay. It was
submitted that the Sanjay and complainant were very close friends and lived in the same house.
The accused submitted that Sanjay dishonestly handed over the blank cheque in question to the
complainant and fraud was being played upon him.
The High Court perused Section 138 (dishonour of cheque) along with its Explanation and noted that the
keyword “legally enforceable debt or other liability”. Similarly, discussing Section 139 (presumption
in favour of the holder), the Court noted that the presumption is rebuttable and the onus is on the
accused to raise a probable defence.
The Court had also reproduced the principles summarised and enumerated by the Supreme Court in
Basalingappa v. Mudibasappa, and observed that the standard of proof for rebutting the
presumption is that of the preponderance of probabilities and not beyond a reasonable doubt. It
was also noted as settled law that § 139 imposes an evidentiary burden and not a persuasive
burden.

13. On the factual score, it was found that there was no evidence as to when the amount in question was
handed over to the accused. No receipts were produced. Also, there was no evidence to show that
the complainant had Rs 4.5 lakhs to give to the accused, and it was also admitted that she was not
even paying income tax. Moreover, the fact of the dispute between Sanjay and the accused was
also admitted. All this, according to the High Court went on to prove that the accused had raised a
probable defence that the complainant had not proved that there was a legally enforceable debt
or other liability. Accordingly, finding no fault with the order of the trial court, the High Court
dismissed the present appeal and upheld the acquittal of the accused.

14. Conclusion
• In the case of Ranjit Singh Rathi, the appeal was rightly dismissed by the learned
appellate court as the respondent-accused was able to bring in record of his periodic
payments to the Complainant-Appellant which reasonably suggested the existence of
some understanding between both of them prior to the date (8th August 2001) as
claimed by the complainant.
• The respondent through ‘preponderance of probabilities’ choked the claims of the
applicant who was unable to put forward any explanation regarding the payment
received earlier from the respondent-accused. The Appellant-Complainant was also not
able to prove the existence of debt/loan on 8th August 2001, whereas the respondent-
accused brought forward evidences that he was paying the amount along with interests.
The court rightly considered the evidence put in record by the respondent-accused and
inferred a logical conclusion.

15. Conclusion
• The Ranjit Singh Rathi case takes the right step towards balance of justice and imbibes
the legal principle established towards the nature of ‘burden of proof’ u/s 139. It is to be
noted that the rule of ‘preponderance of probability’ allows the accused to raise a
probable defence which creates doubts about the existence of a legally enforceable debt
or liability, which on acceptance shifts the burden of proof on the complainant.
• In Kishan Rao v. Shankargouda(2018 SCC), the Apex Court discussed its view on two legal
propositions. Firstly, about the revisional jurisdiction of the High Court where the Apex
Court held that High Court in exercise of revisional jurisdiction shall not interfere with the
order of the Magistrate unless it is perverse or wholly unreasonable or there is non-
consideration of any relevant material, the order cannot be set aside merely on the
ground that another view is possible. Secondly, presumption in favour of holder of
cheque u/s 139 of NI Act where court held that the accused may adduce evidence to
rebut the presumption, but mere denial regarding existence of debt shall not serve any
purpose.

16. Case Analysis Of
Ranjit Singh Sethi v. Abdul Jalil Shaikh
Abdulla
Prepared by-
Mehul Mayank
Sem- 5 B
Roll- 939