Gujarat High Court Rules Section 138 NI Act Complainant Is a 'Victim' Transfers Acquittal Appeal to Sessions Court
EduLaw EditorialLandmark JudgementsThe Gujarat High Court holds that a complainant under Section 138 of the Negotiable Instruments Act is a 'victim' entitled to file an appeal against acquittal directly before the Sessions Court — no High Court leave required. This ruling follows the Supreme Court's landmark doctrine in M/s Celestium Financial v. A. Gnanasekaran (2025 INSC 804). Title: Gujarat High Court Declares Section 138 NI Act Complainant a 'Victim' — Acquittal Appeal Transferred to Sessions Court Without Leave Case Name: Modi Ghanshyamkumar Dahyalal v. Maniyar Mayankkumar Rameshchandra & Anr. Case Number: Criminal Appeal No. 907 of 2024 (R/CR.A/941/2012) Court: High Court of Gujarat at Ahmedabad Judge: Hon'ble Mr. Justice Sanjeev J. Thaker Judgment Date: 13 March 2026 Citation: 2026 SCC OnLine Guj (Neutral Citation: R/CR.A/941/2012, Order dated 13/03/2026) ABSTRACT The Gujarat High Court, in Modi Ghanshyamkumar Dahyalal v. Maniyar Mayankkumar Rameshchandra & Anr., addressed a significant procedural question affecting thousands of cheque dishonour cases pending across the country. The core issue was whether an acquittal appeal filed by a complainant under Section 138 of the Negotiable Instruments Act, 1881 should remain before the High Court under Section 378 of the Code of Criminal Procedure, 1973 , or whether it should be transferred to the Sessions Court on the basis that the complainant qualifies as a "victim" entitled to appeal directly under the proviso to Section 372 CrPC (now Section 413 of the Bharatiya Nagarik Suraksha Sanhita, 2023 ). Relying upon the Supreme Court's authoritative pronouncement in M/s Celestium Financial v. A. Gnanasekaran (2025 INSC 804) and its own earlier decision in Shivsinh Ganpatsinh Solanki v. State of Gujarat (Criminal Misc. Application Nos. 12753/2019 with 12908/2019) , the Gujarat High Court held that the complainant in a Section 138 prosecution is indeed a victim and directed the transfer of the appeal to the competent Sessions Court for disposal on merits. TABLE OF CONTENTS Introduction and Legal Context Facts of the Case and Procedural History Issues Before the High Court Arguments and Submissions of Parties The Court's Reasoning and Ratio Decidendi Key Statutory Provisions Interpreted Landmark Precedents Relied Upon Implications, Impact, and Concluding Observations 1. INTRODUCTION AND LEGAL CONTEXT Cheque dishonour cases prosecuted under Section 138 of the Negotiable Instruments Act, 1881 constitute nearly fifty percent of the total criminal case pendency before trial courts in India. This staggering volume of litigation necessarily generates a proportionate number of appeals when trial courts either convict or acquit the accused. For decades, a procedural labyrinth surrounded the question of who may appeal an acquittal in a complaint case and before which forum. The complainant — the person who initiated prosecution, bore the expense of litigation, and suffered the financial injury — was traditionally required to seek "special leave" from the High Court under Section 378(4) CrPC before an acquittal appeal could even be registered. This gatekeeping mechanism meant that many aggrieved complainants found themselves without remedy when High Courts declined leave on discretionary grounds, without ever adjudicating the merits of the trial court's acquittal order. The legislative landscape changed materially in 2009 when Parliament introduced Section 2(wa) into the CrPC, defining a "victim" as any person who has suffered loss or injury caused by the act or omission for which the accused person has been charged, and simultaneously inserted a proviso to Section 372 granting victims an unconditional right to appeal against acquittals, convictions for lesser offences, or inadequate compensation. Despite this amendment, conflicting High Court interpretations persisted until the Supreme Court settled the controversy in M/s Celestium Financial v. A. Gnanasekaran (2025 INSC 804) . It is against this backdrop that the Gujarat High Court rendered its order in the present case, carrying forward the Celestium doctrine to its logical procedural conclusion — transferring pending acquittal appeals from the High Court to the Sessions Court, which stands as the immediately superior appellate forum above the Magistrate. 2. FACTS OF THE CASE AND PROCEDURAL HISTORY The appellant, Modi Ghanshyamkumar Dahyalal, filed a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881 against the respondent, Maniyar Mayankkumar Rameshchandra, before the competent Magistrate's court in Gujarat. The complaint arose from the dishonour of a negotiable instrument — a cheque — allegedly issued by the respondent in discharge of a legally enforceable debt or liability. After the statutory requirements of demand notice under Section 138 proviso clause (b) were fulfilled and the accused failed to make payment within the stipulated fifteen-day period, prosecution was initiated. The learned trial Magistrate, after conducting trial in accordance with the summary procedure prescribed under Section 143 of the NI Act , acquitted the respondent-accused of the charge under Section 138. Aggrieved by this acquittal, the complainant filed Criminal Appeal No. 907 of 2024 before the Gujarat High Court under Section 378 CrPC (corresponding to Section 419 of the Bharatiya Nagarik Suraksha Sanhita, 2023 ), challenging the judgment and order of acquittal. The appeal remained pending before the High Court for a considerable period. Meanwhile, the legal position regarding the appellate rights of complainants in Section 138 cases underwent a fundamental shift following the Supreme Court's April 2025 ruling in Celestium Financial, and the Gujarat High Court's own consequential decision in Shivsinh Ganpatsinh Solanki rendered on 23 December 2025. When the appeal came up for hearing before Justice Sanjeev J. Thaker on 13 March 2026, learned counsel for the appellant, Mr. Rajesh B. Soni, requested transfer of the appeal to the concerned Sessions Court in light of the new legal position. Mr. Mahesh Bhavsar appeared for respondent No. 1, and Mr. Yuvraj Brahmbhatt, Assistant Public Prosecutor, represented the State (respondent No. 2). The APP concurred that the matter was required to be transferred. 3. ISSUES BEFORE THE HIGH COURT The singular but consequential issue before the Gujarat High Court was whether the pending acquittal appeal filed by the complainant under Section 378 CrPC should be transferred to the Sessions Court on the ground that the complainant, being a "victim" within the meaning of Section 2(wa) CrPC (now Section 2(1)(y) BNSS ), possesses a statutory right to appeal directly before the court immediately superior in hierarchy to the trial court — i.e., the Sessions Court — under the proviso to Section 372 CrPC (now Section 413 BNSS ). Ancillary to this was the question of the appropriate procedural mechanism by which the Registry should effectuate such transfer and how the transferred appeal should be numbered and treated by the Sessions Court. 4. ARGUMENTS AND SUBMISSIONS OF PARTIES The hearing proceeded on consensus. The learned APP submitted at the outset that the matter was required to be transferred in view of the recent authoritative decision of the Gujarat High Court rendered in Criminal Miscellaneous Application No. 12753 of 2019 with Criminal Miscellaneous Application No. 12908 of 2019 (Shivsinh Ganpatsinh Solanki v. State of Gujarat & Anr., decided on 23 December 2025). That decision had, after elaborate consideration of the Supreme Court's pronouncement in M/s Celestium Financial v. A. Gnanasekaran (2025 INSC 804) , conclusively held that the complainant in a Section 138 NI Act prosecution is a "victim" with a specific right to appeal under the proviso to Section 372 CrPC / Section 413 BNSS, and that the appropriate appellate forum is the Sessions Court, being the court immediately superior in hierarchy to the Magistrate who conducted the trial. Learned counsel for the appellant-complainant, upon hearing the Court's reference to this legal position, expressly requested that the appeal be transferred to the concerned Sessions Court. No contrary submission was advanced by any party. 5. THE COURT'S REASONING AND RATIO DECIDENDI Justice Sanjeev J. Thaker, before entering into the merits of the acquittal appeal, considered it proper to address the jurisdictional and procedural question as a threshold matter. The Court noted that its own earlier decision in Shivsinh Ganpatsinh Solanki had, after an exhaustive survey of Supreme Court jurisprudence — particularly the Celestium Financial ruling — established the following settled propositions of law. First, the complainant in a prosecution under Section 138 of the Negotiable Instruments Act qualifies as a "victim" within the statutory definition contained in Section 2(wa) of the CrPC. This is because the dishonour of a cheque issued in discharge of a legally enforceable debt or liability causes direct and quantifiable economic loss to the complainant, who is the payee or holder in due course of the dishonoured instrument. The financial injury suffered by the complainant falls squarely within the expansive language of Section 2(wa), which defines "victim" as a person who has suffered "any loss or injury" caused by the act or omission constituting the offence charged. Second, a person who qualifies as a "victim" possesses, by virtue of the proviso to Section 372 CrPC (Section 413 BNSS), an unconditional and unrestricted right to prefer an appeal against an order of acquittal. This right is independent of, and superior to, the leave-based mechanism prescribed under Section 378(4) CrPC for complainants in complaint cases. The victim need not seek or obtain special leave from any court before filing such an appeal. Third, the appellate court before which the victim's appeal lies is the court "immediately superior in hierarchy" to the trial court that passed the acquittal order. Since Section 138 cases are tried by Judicial Magistrates (usually under the summary procedure of Section 143 NI Act), the immediately superior court is the Court of Sessions. Therefore, the victim-complainant's appeal against acquittal in a Section 138 case lies before the Sessions Court, and not before the High Court. Applying these principles, the Court held that the criminal appeal pending before it was one that properly lay before the Sessions Court. Rather than dismissing the appeal on jurisdictional grounds (which would have caused injustice to the complainant who had filed in good faith under the pre-Celestium legal understanding), the Court adopted the remedial course of directing transfer. The Court ordered the Registry to transfer the entire appeal, along with all records and proceedings including certified copies of the impugned acquittal order, to the concerned Sessions Court. It directed that upon receipt, the Sessions Court shall treat the transferred appeal as an appeal under the proviso to Section 372 CrPC / Section 413 BNSS, number it accordingly, and issue notice to the parties. Significantly, Justice Thaker added a direction regarding expeditious disposal, noting that the matter had been pending for a considerable time. The learned Sessions Court was directed to make every endeavour to dispose of the appeal as expeditiously as possible. The Court also clarified that it had not examined the merits of the case at any stage, thereby preserving the Sessions Court's unfettered jurisdiction to decide the appeal on its substantive merits. 6. KEY STATUTORY PROVISIONS INTERPRETED The judgment engages with several interconnected statutory provisions that together form the architecture of victim appellate rights in Indian criminal procedure. Section 138 of the Negotiable Instruments Act, 1881 creates the offence of cheque dishonour. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account is returned by the bank unpaid — either because of the insufficiency of funds or because the amount exceeds the arrangement made with the bank — such person shall be deemed to have committed an offence punishable with imprisonment which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both. The section is subject to procedural conditions including the requirement of a demand notice served within thirty days of dishonour and the expiry of fifteen days from receipt of notice without payment. Section 2(wa) of the Code of Criminal Procedure, 1973 (inserted by the CrPC Amendment Act, 2008, effective 31 December 2009) defines "victim" to mean a person who has suffered any loss or injury caused by reason of the act or omission for which the accused person has been charged and the expression "victim" includes his or her guardian or legal heir. This definition is designedly broad, encompassing financial loss, physical injury, mental suffering, and any other form of harm traceable to the alleged criminal act. Section 372 of the CrPC (main provision) states that no appeal shall lie from any judgment or order of a Criminal Court except as provided for by the Code or by any other law for the time being in force. The proviso, inserted in 2009, carves out a critical exception: "Provided that the victim shall have a right to prefer an appeal against any order passed by the Court acquitting the accused or convicting for a lesser offence or imposing inadequate compensation, and such appeal shall lie to the Court to which an appeal ordinarily lies against the order of conviction of such Court." Section 413 of the Bharatiya Nagarik Suraksha Sanhita, 2023 is the successor provision to Section 372 CrPC and substantially replicates the proviso conferring victim appellate rights, thus ensuring continuity of the legal position under the new procedural code. Section 378(4) CrPC provides that if a complainant in a case instituted upon a complaint wishes to appeal against an acquittal, he or she may apply to the High Court for special leave to appeal. Only upon grant of such leave may the appeal proceed. The Supreme Court in Celestium Financial clarified that this provision applies to complainants proceeding qua complainant, but where the complainant is also a victim, the easier pathway of the Section 372 proviso is available without any leave requirement. 7. LANDMARK PRECEDENTS RELIED UPON The judgment rests on a clear chain of precedential authority that traces the evolution of the "complainant-as-victim" doctrine. M/s Celestium Financial v. A. Gnanasekaran & Ors. (2025 INSC 804) is the foundational Supreme Court decision. Delivered on 8 April 2025 by a bench comprising Justice B.V. Nagarathna and Justice Satish Chandra Sharma, this ruling definitively held that a complainant in a Section 138 NI Act prosecution qualifies as a "victim" under Section 2(wa) CrPC and may appeal an acquittal directly under the proviso to Section 372 without seeking special leave under Section 378(4). The Court reasoned that dishonour of a cheque causes direct economic injury to the complainant, bringing the complainant within the victim definition. It set aside the Madras High Court's refusal to grant leave and recognised the appellant's absolute right to appeal as a victim. Mallikarjun Kodagali v. State of Karnataka (2019) 2 SCC 752 was the earlier Supreme Court decision that first explored whether a victim's appeal under Section 372 proviso requires leave. The two-judge bench delivered split opinions — Justice Lokur held that the victim's right of appeal is unconditional and requires no leave, while Justice L. Nageswara Rao (as then designated in some reports as Gupta J.'s view) suggested leave was necessary. The Celestium Financial bench expressly adopted Justice Lokur's broader, victim-centric interpretation as the correct statement of law. Shivsinh Ganpatsinh Solanki v. State of Gujarat & Anr. (Criminal Misc. Application Nos. 12753/2019 with 12908/2019, decided 23 December 2025) is the Gujarat High Court's own full-fledged decision applying the Celestium doctrine. After considering the Supreme Court's pronouncement and the various judgments cited therein, the Gujarat High Court concluded that pending applications for leave to appeal and appeals filed by Section 138 complainants before the High Court should be transferred to the concerned Sessions Court. This decision created the direct precedential basis for the transfer order in the present case. Additionally, the broader jurisprudential framework draws upon the 154th and 221st Law Commission Reports, the Justice Malimath Committee Report (2003), and the Prof. Madhava Menon Committee Report (2007) — all of which recommended strengthening victim participation in criminal proceedings and culminated in the 2009 amendments introducing the victim definition and appellate right. 8. IMPLICATIONS, IMPACT, AND CONCLUDING OBSERVATIONS The decision in Modi Ghanshyamkumar Dahyalal v. Maniyar Mayankkumar Rameshchandra carries implications that extend far beyond the individual appeal disposed of by Justice Thaker. It represents one among what is likely a large number of transfer orders being passed by the Gujarat High Court as it systematically channels Section 138 acquittal appeals to Sessions Courts across the state. The practical consequences are multi-dimensional. For complainants who have filed appeals before the High Court — many of whom waited years for their turn on the High Court's overburdened criminal appellate list — the transfer to Sessions Courts offers the realistic prospect of faster hearings and disposal. Sessions Courts, being the designated appellate forum under the proviso to Section 372, are now required to treat these transferred matters with the urgency that prolonged pendency demands. Justice Thaker's direction for expeditious disposal underscores judicial awareness that the passage of time itself operates as a denial of justice in commercial disputes. For the broader practitioner community, the judgment confirms that the procedural gateway for all future acquittal appeals in Section 138 cases lies at the Sessions Court. Complainants need not seek High Court leave under Section 378(4) and should file appeals directly as victims under the proviso to Section 372 CrPC / Section 413 BNSS. This simplification eliminates a layer of procedural complexity that previously added months or years to litigation timelines. From the perspective of accused persons who have secured acquittals in cheque dishonour cases, the ruling means that their acquittals face a lower barrier to appellate challenge. Under the earlier regime, the complainant's appeal could be thwarted at the leave stage itself if the High Court declined permission. Now, the appeal lies as of right, and the Sessions Court must hear it on merits. This may incentivise accused persons to seek early settlement or compounding under Section 147 of the NI Act rather than rely on procedural attrition. The judgment also carries significance for the interpretation of the Bharatiya Nagarik Suraksha Sanhita, 2023, which has replaced the CrPC. The Court's reference to both Section 372 CrPC and Section 413 BNSS, and both Section 378 CrPC and Section 419 BNSS, ensures that the legal position is understood as continuous and applicable regardless of which procedural code governs a particular case based on its filing date. The "complainant-as-victim" doctrine has thus been seamlessly carried forward into the new legislative dispensation. In conclusion, Modi Ghanshyamkumar Dahyalal v. Maniyar Mayankkumar Rameshchandra represents a practical and procedurally significant implementation of the Supreme Court's Celestium Financial doctrine by the Gujarat High Court. While the order is brief and does not engage with the merits of the underlying cheque dishonour dispute, its systemic importance lies in demonstrating how courts are operationalising the victim's right of appeal by redirecting pending cases to the appropriate appellate forum. The decision affirms that in the landscape of Section 138 litigation, the complainant is not merely a private prosecutor but a victim of financial crime entitled to the full panoply of appellate rights that Parliament conferred through the 2009 amendments and the Supreme Court has now authoritatively interpreted. The cheque dishonour complainant's journey from procedural supplicant seeking leave to appeal to a rights-bearing victim with unconditional appellate access marks a profound transformation in Indian criminal procedure jurisprudence. Key Sections Referenced: Section 138, Negotiable Instruments Act, 1881 | Section 2(wa), CrPC | Section 372 (Proviso), CrPC | Section 378(4), CrPC | Section 413, BNSS 2023 | Section 419, BNSS 2023 | Section 143, NI Act | Section 147, NI Act | Section 2(1)(y), BNSS 2023 Key Case Laws Cited: M/s Celestium Financial v. A. Gnanasekaran (2025 INSC 804) | Mallikarjun Kodagali v. State of Karnataka (2019) 2 SCC 752 | Shivsinh Ganpatsinh Solanki v. State of Gujarat (Cr. M.A. Nos. 12753/2019 with 12908/2019, decided 23.12.2025) Tags: Section 138 NI Act, Cheque Dishonour, Victim Rights, Section 372 CrPC, Section 413 BNSS, Gujarat High Court, Acquittal Appeal, Sessions Court, Complainant as Victim, Celestium Financial, Negotiable Instruments Act