Supreme Court restores conviction after rejecting weak cheque defence.

The Supreme Court has held that there is a statutory presumption that every negotiable instrument was made or drawn for consideration. A bare denial that no consideration was paid or that no debt existed is not enough to support the defence of an accused in a cheque dishonour case under Section 138 of the Negotiable Instruments Act.

A Bench of Justices B V Nagarathna and Ujjal Bhuyan said that to disprove the statutory presumptions, the accused must bring something probable on record to shift the burden of proof back to the complainant.

What must an accused prove to rebut the presumption?

The accused has to bring on record such facts and circumstances which, upon consideration, may lead the court to believe that the consideration and debt did not exist, or that their non-existence was so probable that a prudent person would, under the circumstances, act on the plea that they did not exist, the Court said.

The Bench made the observations while allowing an appeal filed by Kuntegowda against the Karnataka High Court's October 6, 2023 judgment. The high court had set aside the order of a Bengaluru court which had held Thurubaiah guilty under Section 138 of the Negotiable Instruments Act and sentenced him to pay a fine of Rs 9 lakh.

The complainant had alleged that Thurubaiah issued a cheque in December 2010 towards repayment of a Rs 4.5 lakh hand loan taken to purchase a site. The cheque was dishonoured in March 2013, following which criminal proceedings were initiated.

Examining the matter, the Supreme Court said that since the accused had not disputed that the signature on the cheque was his, the presumptions under Sections 118 and 139 of the NI Act ought to be invoked against him, making him liable under Section 138 of the Act.

"If the court finds that the complaint was filed within the period of limitation and the other requirements such as the presentment of cheque within six months from the date on which it was drawn, demand of the said amount through legal notice within thirty days and non-repayment of the cheque amount within a period of fifteen days thereafter are fulfilled, the court has to set in motion the wheel of criminal machinery as envisaged under Section 138 of the NI Act," Court said.

Why did the Supreme Court reject the accused's defence?

In the present case, Court found that the accused had made a "frivolous and feeble attempt" to rebut the allegations in the complaint.

The accused had claimed that he had borrowed Rs 40,000 from S.B. Ramachandraiah and had issued a blank cheque to him, which was later misused by the complainant.

The Supreme Court rejected this defence, noting that the accused had taken no steps to recover the cheque or documents allegedly misappropriated by the complainant.

"We fail to see any step that was undertaken by the accused to recover the said cheques from him. No legal action has been undertaken by him to show that there was any attempt made by the accused for recovering the cheques and documents issued by him which were allegedly misappropriated by the complainant herein," the Bench said.

Court also found that the oral and documentary evidence produced by the complainant was consistent with the guilt of the accused.

The Bench rejected the defence that the complainant lacked the financial capacity to advance the Rs 4.5 lakh loan.

It pointed out that the accused's failure to respond to the statutory notice issued under Section 138 of the NI Act gave rise to an inference that the complainant's version carried merit.

The initial burden of raising a defence that the complainant lacked the financial capacity to advance the loan rests upon the accused and should have been specifically pleaded in the reply to the demand notice, Court said.

In the absence of such a plea, the complainant cannot be expected to adduce evidence establishing his financial capacity to advance the loan while leading his evidence, it added.

Court also emphasized that once the signature on the cheque is proved, the necessary corollary is that the accused was aware of the contents of the cheque unless the contrary is proved. In the present case, the contrary was not established.

Limits of revisional jurisdiction

The Bench also dealt with the scope of revisional jurisdiction and said that a revisional court should not examine the facts and evidence of a case like an appellate court.

"The court, in revision, considers the material only to satisfy itself about the correctness, legality and propriety of the findings, sentence and order recorded by the lower court, and should refrain from substituting its conclusion on an elaborate consideration of evidence and the findings of the lower courts should not be reversed merely on the ground that an alternative view is possible on the facts of the case. In this case, such a position did not also emanate from the evidence on record," the Bench said.

The Supreme Court found that the high court had gone into great detail while examining the testimonies, documents and merits of the case, even though the matter was before it in revisional jurisdiction.

"Instead, acting as an appellate court, the high court deemed it fit to go into the merits of the case, something which is generally impermissible unless a glaring contradiction is apparent on the face of record," the Bench said.

Court held that the high court had failed to identify any reason or material showing a glaring contradiction or perversity on the face of the record that could justify the exercise of revisional jurisdiction.

It therefore held that the high court had erred in interfering with the conviction.

"We are of the view that the high court committed an error in setting aside the order of conviction in exercise of revisional jurisdiction. No sufficient ground has been mentioned by the high court in its judgment to enable it to exercise its revisional jurisdiction for setting aside the conviction," the Bench said.

The Supreme Court accordingly set aside the high court's judgment and restored the judgments and orders of the trial court and Sessions Court.

Case Title: Kuntegowda Vs Thurubaiah

Bench: Justices B V Nagarathna and Ujjal Bhuyan 

Date of Judgment: August 4, 2026

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