The Bombay High Court has clarified the procedural pathway for challenging an acquittal under Section 138 of the Negotiable Instruments Act, affirming that such challenges must be treated as appeals under Section 372 of the Code of Criminal Procedure. This decision resolves ambiguity in post-acquittal remedies and aligns lower court practice with the Supreme Court’s recent authoritative interpretation.
Background & Facts
The Dispute
The applicant, Sustainable Agro Commercial Finance Limited, sought leave to appeal against an order of acquittal passed by a Magistrate in a case under Section 138 of the Negotiable Instruments Act. The respondent, Ganesh Khanderav Thorat, had been acquitted after the prosecution failed to establish the essential ingredients of the offence, particularly the existence of a legally enforceable debt at the time of cheque issuance.
Procedural History
The case progressed as follows:
- The Magistrate acquitted the accused on grounds of insufficient evidence.
- The complainant company filed an application for leave to appeal before the Bombay High Court, Aurangabad Bench, under the erstwhile framework for appeals against acquittals.
- Prior to hearing, the applicant cited the Supreme Court’s decision in Celestium Financial v. Ganasekaran [(2025) SCC OnLine SC 1320], which held that appeals against acquittals under Section 138 NI Act must be treated as appeals under Section 372 CrPC, not as applications for leave to appeal.
Relief Sought
The applicant sought transfer of the matter to the District and Sessions Court for adjudication as a statutory appeal, arguing that the Supreme Court’s ruling rendered the current procedural posture obsolete.
The Legal Issue
The central question was whether an application for leave to appeal against an acquittal under Section 138 of the Negotiable Instruments Act must be treated as an appeal under Section 372 of the Code of Criminal Procedure, following the Supreme Court’s ruling in Celestium Financial v. Ganasekaran.
Arguments Presented
For the Appellant
The applicant’s counsel contended that the Supreme Court in Celestium Financial v. Ganasekaran had unequivocally held that appeals against acquittals under Section 138 NI Act are not subject to the leave-to-appeal regime under Section 378 CrPC. Instead, they are statutory appeals under Section 372 CrPC, which permits the complainant to file an appeal directly without seeking leave. The applicant argued that continuing with the leave application would be procedurally defective and contrary to binding precedent.
For the Respondent
The respondent’s counsel did not oppose the transfer but acknowledged the binding nature of the Supreme Court’s decision. He did not contest the legal proposition but urged that the Sessions Court should examine the merits of the acquittal with due caution, given the high threshold for overturning findings of fact.
The Court's Analysis
The Court examined the evolution of appellate remedies under the CrPC and the specific implications of the Supreme Court’s ruling in Celestium Financial v. Ganasekaran. It noted that prior to this judgment, courts often treated appeals against acquittals under Section 138 as applications under Section 378 CrPC, requiring leave. However, the Supreme Court clarified that Section 372 CrPC, which grants the complainant an absolute right to appeal against any order of acquittal, applies fully to cases under the NI Act.
"The right of the complainant to appeal against an order of acquittal under Section 138 NI Act is not contingent upon leave; it is a statutory right under Section 372 CrPC, which is not subject to any discretionary filter."
The Court emphasized that Section 372 CrPC is a substantive right, not a procedural formality. It further held that the High Court’s role in such matters is not to adjudicate the merits of the acquittal but to ensure the matter is transferred to the appropriate forum for hearing as a regular appeal. The Court rejected any notion that the complainant must first obtain leave, noting that such a requirement would nullify the legislative intent behind Section 372.
The Court also directed that the time spent in prosecuting the leave application before the High Court must be excluded from the limitation period for filing the appeal, to prevent prejudice to the complainant’s statutory rights.
The Verdict
The applicant succeeded. The Court held that an application for leave to appeal against an acquittal under Section 138 of the Negotiable Instruments Act must be treated as an appeal under Section 372 of the Code of Criminal Procedure. The matter was ordered to be transferred to the District and Sessions Court for hearing as a statutory appeal, with time spent before the High Court excluded from limitation calculations.
What This Means For Similar Cases
Appeals Against Acquittal Are Not Subject to Leave
- Practitioners must now file direct appeals under Section 372 CrPC against acquittals in Section 138 cases, not applications for leave.
- High Courts should no longer entertain applications for leave to appeal in such matters; they must transfer them to Sessions Courts immediately.
- Failure to treat these as appeals under Section 372 CrPC renders the proceeding void ab initio.
Time Spent in High Court Excluded from Limitation
- The period during which the complainant pursued a defective leave application before the High Court will not count toward the 30-day limitation under Section 372 CrPC.
- Sessions Courts must compute limitation excluding this period to ensure fairness and compliance with the Supreme Court’s directive.
Statutory Right Overrides Procedural Formalities
- The right to appeal under Section 372 CrPC is absolute and cannot be curtailed by judicial interpretation or procedural delay.
- Courts must prioritize substance over form: if the complainant seeks to challenge an acquittal, the remedy is an appeal, not a petition for permission.
