High Court · 2025
Facts
-1- Cri.Appeal.882.2023IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABAD CRIMINAL APPEAL NO. 882 OF 2023Hitendra S/o. Vinayakrao Upadhyay,Age : 62 years, Occu. : Agriculture,R/o. Sahakar Nagar, Anukrupa Building,Parbhani, Tq. & Dist. Parbhani.…. Appellant(Orig. Complainant)VersusShankar S/o. Rajaram Gaud,Age : 58 years, Occu. : Business,R/o. Om Niwara Complex, “Niwara”,Nivara Housing Society, Takli Naka, Near Cement House, Kopargaon, Tq. Kopargaon, Dist. Ahmednagar.… Respondent (Orig. Accused)……Mr. V. D. Hon, Senior Counsel i/b. Mr. Mayur Subhedar, Advocate forAppellant.Mr. P. R. Katneshwarkar, Senior Counsel i/b. Mr. V. S. Undre, Advocatefor Respondent....…CORAM :ABHAY S. WAGHWASE, J.RESERVED ON :12 SEPTEMBER 2025PRONOUNCED ON :14 OCTOBER 2025JUDGMENT :1.Original complainant, who instituted proceedings undersection 138 of Negotiable Instruments Act, against present respondent, ishereby assailing judgment and order of acquittal dated 03.03.2022passed by learned Judicial Magistrate First Class, Parbhani acquitting theaccused from above offence. -2- Cri.Appeal.882.2023FACTS GIVING RISE TO PRESENT APPEAL ARE AS UNDER2. A CL-III Country Liquor Shop licence, stood in the name ofone Vinayakrao Narmadashankar Upadhyay and his sons, who werepartners. As they were unwilling to conduct the business, there was offerby the present respondent, who worked as Manager, to get liquor licencetransferred in his name and conduct the business. Agreement wasreached at between the parties. Deal was finalized for payment ofRs.25,00,000/- towards the goodwill and both parties had agreed toapply for transfer of licence to the Collector i.e. in the name of originalaccused. Procedure was completed and licence was also transferred in thename of accused. Towards the agreed amount accused allegedly issuedcheques. On its presentation, the same were returned dishonoured, whichwas followed by issuance of demand notice by complainant and onfailure to pay the cheque amounts, proceedings under section 138 of N.I.Act were initiated. Parties led respective evidence. After appreciating thesame, learned trial court was pleased to acquit the accused holding thatthere was no case made out for legally enforceable debt. Such acquittal isnow challenged by filing appeal, pursuant to this court granting leave tofile appeal by order dated 11.09.2023.3.Here, as submitted and as is emerging from record, this court -3- Cri.Appeal.882.2023had heard the appeal and vide judgment and order dated 08.01.2025 wasalso pleased to allow the same, thereby overturning the order ofacquittal. The same was questioned before the Hon’ble Supreme Court byfiling Petition for Special Leave to Appeal (Cri.) No.2649 of 2025 and byorder dated 07.03.2025, following order is passed : “Leave granted.In terms of the signed order, the impugned judgment dated08.01.2025 is set aside without commenting on the merits of thecase. Criminal Appeal No. 882 of 2023 shall stand revived on thefile of the High Court of Judicature at Bombay, Bench atAurangabad, and shall be heard afresh, without being influencedby the impugned judgment and the present order.The appeal is disposed of, in terms of signed order.Pending application(s), if any, shall stand disposed of.”It is in the above backdrop, appeal is heard afresh.SUBMISSIONSApart from making oral submissions, written notes ofarguments are placed on record by each of the side.On behalf of Appellant Sr. Counsel Mr. V. D. Hon. :4.Learned Senior Counsel would point out that, there is nodispute that CL-III licence stood in the name of appellant and on accountof their reluctance to conduct Country Liquor Shop business and due totheir acquaintance with respondent accused, who was also their -4- Cri.Appeal.882.2023Manager, licence was sought to be transferred. Learned Senior Counselpointed out that there was written agreement, which is at Exh.28. Hewould point out that, it was agreed between the parties that towards the“Goodwill” an amount of Rs.25,00,000/- would be paid by accused. That,complainant had performed their part of contract i.e. applying fortransfer of CL-III licence with the Collector, Parbhani. That, licence wasalso accordingly got transferred and hence he submitted that, it wasexpected of accused also to perform his part for contract i.e. parting withthe amount as agreed. That, however, accused had failed on twooccasions to meet the timeline as sought by him. That, on hot persuasionaccused issued cheques towards above agreement, however, the samewere dishonoured. Learned Senior Counsel pointed out that, therefore,complainant was constrained to dispatch legal notice demandingRs.25,00,000/-. In spite of accused failed and therefore finally legalrecourse was taken by instituting proceedings under section 138 of N.I.Act vide S.C.C. No.930 of 2017.5.Learned Senior Counsel pointed out that, before trial court,complainant adduced their own oral evidence as well as documentaryevidence as contemplated under law. Witness to the agreement, whichwas notarized, was also examined. That, full-proof case comprising of allessential ingredients under section 138 of N.I. Act were made available -5- Cri.Appeal.882.2023with the complainant’s evidence. It is also his submission that, initialburden was thereby discharged by complainant, and therefore,presumption under sections 118 and 139 of N.I. Act got automaticallyattracted. Accused failed to rebut the case of complainant. There is nodenial of either issuance of cheque or signature over it. Under suchcircumstances, it is his submissions that conviction ought to have beenrecorded. However, according to him, learned trial court failed toappreciate availability of legally acceptable evidence, admissions ofaccused regarding transfer of licence in his name being completed on dueinquiry. 6.Learned Senior Counsel took this court through the evidenceof complainant i.e. both, oral and documentary and would point out that,there was legally enforceable debt at the end of accused. That, learnedtrial court failed to consider and appreciate the same and also failed toconsider settled legal position. That, other ancillary proceedingsinstituted by complainant like Revision on account of issuance of processwere rejected by this court. Similarly, Writ Petition filed by accusedbearing No.3765 of 2018 and Second Appeal No. 917 of 2022 werealready dismissed by this court. For all above reasons, learned SeniorCounsel seeks indulgence at the hands of this court. He has placed onrecord relevant citations as well as list of documents.
Legal Reasoning
-9- Cri.Appeal.882.202311.Original complainant has taken exception to the order ofacquittal by filing instant appeal. On hearing learned Senior Counsel forthe appellant and on studying the written notes, the gist of appellant’scase seems that, appellants were initially conducting business of sale ofliquor on the strength of licence issued by concerned authority. To thisextent there is no dispute by the other side. Appellant’s case is that, theaccused showed interest to take over the business on getting licencetransferred in his name and in return, it was allegedly agreed by accusedto pay a sum of Rs.25,00,000/- towards the goodwill. After formalities oftransfer were completed, on participation of complainant and accused,licence was transferred in the name of accused, who started conductingbusiness. Appellant’s case is that, as agreed by accused, he was calledupon to pay price of the goodwill and accused though delayedcompliance, issued five cheques with assurance that it would behonoured. However, on presentation of the same, the same weredishonoured and when accused replied to legal notice under section 138of N.I. Act issued by complainant, taking stand of no agreement on thepoint of payment of Rs.25,00,000/- towards goodwill, complaint undersection 138 of N.I. Act has been instituted.12.In support of commission of above offence, there is evidenceof complainant Hitendra (CW1), who is said to be one of the partner of -10- Cri.Appeal.882.2023the firm, who were originally conducting liquor sell business of thelicence. Complainant has also adduced the evidence of CW2, whonotarized the alleged notarized agreement i.e. Exh.28, which is said to bean agreement between the parties regarding payment of Rs.25,00,000/-towards goodwill.13.Defence though did not adduce evidence, took a stand thatthere was another transaction between his wife and Manish pertaining toland and in that transaction cheques which were issued, were misused inthe instant 138 N.I. Act complaint and complainant is cross examined onsuch line.14.It is settled law that, in cases of 138 N.I. Act, there is burdenon complainant to prove essential ingredients of 138 N.I. Act, i.e. it is tobe demonstrated and rather substantiated that there was legallyenforceable debt which was dishonoured. Once the foundational facts areproved by the complainant, presumption available under section 139 ofN.I. Act steps in and then onus shifts on accused to rebut the saidpresumption. This is the fairly settled legal position in cases of suchnature.15.On re-appreciating the complainant’s evidence, his casecould be summarized in brief as under :- -11- Cri.Appeal.882.2023 That, in April 2013, accused Shankar was appointed as aManager to look after the day to day complainant’s shop. It is specificcase of complainant that, accused wanted to test business potential andinitially executed ‘naukarnama’ i.e. for ascertaining the profits returnsfrom the said business. Further case put up is that, both parties agreed totransfer liquor licence in favour of accused and accordingly participatedin the procedure for transfer of licence with the Collector Office. On22.06.2015, the Collector Parbhani granted the application for transfer ofshop licence in the name of accused. That, as agreed accused wasexpected to pay Rs.25,00,000/- towards goodwill, but he failed. Ithowever seems to be the case of complainant that after gap of twomonths thereafter i.e. on 22.08.2015, an agreement (Exh.28) wasnotarized, wherein accused undertook to pay Rs.25,00,000/- with 24%rate of interest from 22.06.2015 till realization of the amount and fivecheques were duly issued payable by Central Bank of India, KopergaonBranch, Ahmednagar. Said cheques are of 05.04.2017; 10.04.2017;15.04.2017; 20.04.2017 and 25.04.2017. It is further case of complainantthat, initially above cheques were in Marathi and by way of mischief,issued cheque of the year 2017 which should have been of the year 2016and accused twice urged for extensions of time to make payments i.e.first extension was sought on 31.03.2016 and second one was on05.04.2016. Above referred cheques were tendered for realization, but -12- Cri.Appeal.882.2023each cheque was distinctly dishonoured with remark as “fundsinsufficient”. Hence, demand notice was issued and also received byaccused. 16.What can be discerned from above discussed chronology ofevents is that, according to complainant accused had agreed to purchasethe licence in the year 2013. Further it is also his clear case that, therewas oral agreement between them regarding payment of Rs.25,00,000/-towards goodwill. Thus, there is nothing in black and white regardingalleged purchase of licence for Rs.25,00,000/ towards goodwill. Partiesseem to have participated in making application before the Collector,Parbhani seeking transfer of licence on 08.01.2014 itself. Complainant’sown case suggests that said application was granted by the Collector andlicence was transferred in the name of accused on 22.06.2015, butalleged agreement Exh.28 is of 22.08.2015 i.e. after two months of actualtransfer. Mere pleadings are made that accused sought extension of timeto make payments twice i.e. on the count of amount to be huge andsecondly on the ground of marriage of his son and expenses required foreducation. No timely steps seem to be taken by the complainant for longgap since even date of transfer of application in favour of accused dated08.01.2014. Allegations are levelled that notice served upon complainantby Excise authorities, was received by accused and behind their back -13- Cri.Appeal.882.2023licence was got transferred. With such case of complainant, it wasexpected of him to demonstrate that behind his back accused obtainednotice served on complainant and without giving knowledge to them gotthe licence transferred. It was possible for complainant to demonstrate byway of acknowledgment over the alleged notice served on complainantby the Collector Parbhani. The same does not seems to be happened here,and moreover complainant has admitted in cross that even in statementbefore Excise authorities there is no reference of Rs.25,00,000/- agreedby accused to be paid towards goodwill.17.Learned Senior Counsel representing accused has submittedthat, neither the Maharashtra Prohibition Act, 1949 nor any Rulesthereunder provide for transfer of licence on payment of price forgoodwill. In this regard, he took this court through the observations oflearned trial court commencing from paragraph nos.28 to 42. Submissionto this extent made before this court are not countered.18.Much emphasize is laid on Exh.28 which is said to be anotarized written agreement. However, in the body of complaint,complainant has set up a case of only agreement. Witness on the point ofExh.28 is also examined to prove the same. However, as stated above,complainant came with a case that there was oral agreement for payment -14- Cri.Appeal.882.2023of goodwill for sell of licence in the year April 2013. Specific date is notsupplied. As stated above, in the body of complaint, it is not reflectedwhether agreement was written one. In the very Exh.28, there isreference of mere oral agreement. Said oral agreement is admitted incross to be eight months prior to making application to the Collector fortransfer. Original agreement is also not finding place in the record.Answer of complainant to this is that original copy is with accused, butno steps are taken to call upon accused to produce the same. In fact,Exh.28 carries contents regarding payment of Rs.25,00,000/- towardsgoodwill on the day of transfer of licence. Here, as stated above, licenceis shown to be transferred on 22.06.2015 itself. Though case is tried tobe set up that time was got extended by accused on one or the othercount, there is no distinct evidence to that extent. When complainant wasdiligent enough to get Exh.28 executed, it was further expected of him toalso get further extensions also to be put in black and white. However,same has not been done by complainant.For above reasons, contention of complainant that there wasagreement between complainant and accused for transfer ofRs.25,00,000/- towards goodwill, has no strong foundation. Mere, yearof oral talks i.e. April 2013 is not convincing in offence of 138 of N.I. Act,which requires strict proof of evidence and adherence of technicalities. -15- Cri.Appeal.882.2023Complainant seems to have kept silent since date of transfer of licencei.e. 22.06.2015 till issuance of legal notice under section 138 of N.I. Actand further filing of complaint. 19.In view of nature of case, it is expected of complainant tosubstantiate existence of legally enforceable debt. Only when burden tothis extent is successfully discharged by complainant, presumptionavailable under section 139 of N.I. Act comes to his rescue and furtheronus shifts on accused to rebut the presumption. But as stated above,complainant’s case is not full proof, for the reason that, alleged oralagreement of payment of Rs.25,00,000/- towards goodwill are of 2013 –2014. Initial cheques in question were apparently of 2017 andcomplainant claims that said mischief was realized and accused wascalled upon to issue fresh cheque of 2016. Coupled with this, when thereis nothing to show that accused owed Rs.25,00,000/- towards goodwill,accused has not succeeded in discharging initial burden for attractingfurther presumption. No legally enforceable debt has been shown to bein existence when the cheques were obtained and put to its realization. 20.On the other hand, accused had come up with specificdefence that cheques in question were pertaining to distinct landtransaction between Manish and wife of respondent accused and the -16- Cri.Appeal.882.2023same are misused. The relevant translated portion of cross examinationof CW1 complainant, is reproduced as under :“It is true that, the place where the said country liquorshop is located was in the name of my brother Manish.It is trued that, on 21.03.2013, Manish sold the saidland along with the building and construction on it, tothe wife of the accused Shankar Gaud.”In the light of answer given by this witness in cross,admitting land transaction between Manish and wife of accused, defencehas succeeded in probabilizing their case that cheques in question werepertaining to another land transaction and no such cheques ever issuedtowards any agreement towards goodwill. Therefore, defence hassucceeded in probabilizing their case to the greater extent.21. Though learned Senior Counsel for appellant has relied oncitations, facts in those cases are distinct and hence, does not come to therescue of complainant – appellant. On the contrary, the facts in thecitations relied by learned Senior Counsel for respondent accused i.e.judgment of Vikas Gopi Bhagat (Supra) as well as Shaikh Jalal (D)Through LRs (Supra), are closer to the facts to the case in hand i.e. unlesslegally enforceable debt is proved, accused cannot be held guilty. -17- Cri.Appeal.882.202322.Having gone through the impugned judgment and order ofacquittal, I am convinced that all legal requirements have been kept inmind while evaluating the oral and documentary evidence. No errorwhatsoever has been committed while appreciating the evidence. Noinfirmity or perversity is brought to our notice in appeal so as to interferein the judgment and order under challenge. Hence, I proceed to pass thefollowing order:ORDERThe appeal is hereby dismissed. (ABHAY S. WAGHWASE, J.) Tandale
Arguments
-6- Cri.Appeal.882.2023On behalf of Respondent Sr. Counsel Mr. P. R. Katneshwarkar :- 7.Supporting the judgment of acquittal passed by learned trialcourt, learned Senior Counsel Shri Katneshwarkar would submit that,here, claimant had miserably failed to prove existence of legallyenforceable debt. He pointed out that, there is denial of any oral orwritten agreement to pay amount of Rs.25,00,000/- towards goodwill asasserted by complainant. It is pointed out that, no doubt, as appellantwas unwilling to conduct the business, there was offer by the presentrespondent, who worked as Manager, to get liquor licence transferredand conduct the business. Accordingly, after both parties jointlyparticipated in the proceedings of transfer of licence and the same hasbeen transferred by the authorities i.e. on payment of necessary fees. It isemphasized that, even essential ingredients for attracting the chargesunder section 138 of N.I. Act are not available and as fundamentalburden of making out the case for offence punishable under section 138of N.I. Act itself is not discharged by complainant, learned SeniorCounsel questions the contention regarding accused failing to dischargehis burden on owners. He submitted that, the provisions under which thelicence was got transferred do not acknowledge or require payment ofany amounts towards goodwill. According to him, at the outset, -7- Cri.Appeal.882.2023complainant had no ownership or brand name of which liquor was soldso as to seek goodwill. That, the State of Maharashtra is the real owner ofthe business and that complainant was merely permitted to conduct ofsale of liquor in the capacity of licence. Learned Senior Counsel haspointed out that so called transaction of transfer of licence of 2013 andcheques in question are of 2017. Contentions raised by the complainantthat accused twice borrowed time to repay amount towards goodwill, hasno foundation either in the form of oral or the documentary evidence.8.Learned Senior Counsel would strenuously submit that,though cheques are issued, the same are not towards transaction allegedby complainant, rather there are cheques pertaining to other landtransaction between brother of complainant and wife of accused. Saidcheques are misused and false case has been set up. That, complainantfailed to make out the case under section 138 of N.I. Act and on thecontrary, accused succeeded in substantiating his defence. Thus,according to him, learned trial court committed no error whatsoever inacquitting the accused and ultimately he urges for dismissal of appeal.Learned Senior counsel seeks reliance on the following judgments :(i)Rajco Steel Enterprises v. Kavita Saraff & Anr., (2024) 9 SCC 390(ii)Anss Rajashekar v. Augustus Jeba Ananth, (2020) 15 SCC 348(iii)Vikas Gopi Bhagat v. Shivdas Pednekar & Anr., 2019 SCC OnLine Bom 1367 -8- Cri.Appeal.882.2023(iv)Anugrah Stock & Stock & Broking Pvt. Ltd. v. Parind Sushil Parekh and Anr., 2015 SCC OnLine Bom 2644(v)Shaikh Jalal (D) Through LRs v. State of Goa, 2018(1) Mh.L.J. 2259.At the threshold, it is to be mentioned that this court haddecided the appeal vide judgment and order dated 08.01.2025 inCriminal Appeal No. 882 of 2023. The matter was taken up before theHon’ble Apex Court vide Petition for Special Leave to Appeal (Crl.) No.2649 of 2025 by Shankar and the Hon’ble Apex Court by its order dated07.03.2025, without commenting on merits of the case, directed thatCriminal Appeal No. 882 of 2023 be revived and restored on the file ofthis court with further directions to hear the appeal afresh.10.As stated above, in such backdrop, appeal is heard afreshand taken up for decision. As stated above, apart from making oralsubmissions, both learned Senior Counsel, representing each of the party,had placed on record written notes of arguments and some rulings reliedby them and the gist of the same is already dealt in aforesaid paras.Appeal pertains to judgment and order of acquittal passed bylearned trial court i.e. J.M.F.C., Court No.5, Parbhani, dated 03.03.2022acquitting the accused (present respondent) from offence punishableunder section 138 of N.I. Act.