2026 INSC 790

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REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. OF 2026

(Arising out of Special Leave Petition (Criminal) No.2247 of 2024)

KUNTEGOWDA … APPELLANT

VERSUS

THURUBAIAH … RESPONDENT

J U D G M E N T

NAGARATHNA, J.

Leave granted.

2. The present criminal appeal has been preferred by the

complainant/appellant assailing the order dated 06.10.2023

passed by the High Court of Karnataka at Bengaluru in Criminal

Revision Petition No.1502 of 2016 wherein the High Court allowed

the said criminal revision petition preferred by the respondent

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(hereinafter referred to as ‘accused’) and thereby set aside the order

of conviction dated 19.09.2016 passed by the Court of LXV

Additional City Civil & Sessions Judge, Bangalore in Criminal

Appeal No.1224 of 2015. The said Criminal Appeal was preferred

by the accused being aggrieved by the judgment dated 01.09.2015

of the Court of the XL Additional Chief Metropolitan Magistrate,

Bangalore in Complaint Case No.12108 of 2013 wherein the

Magistrate had convicted him under Section 138 of the Negotiable

Instruments Act, 1881 (hereinafter referred to as “NI Act”) and

thereby sentenced him to pay a fine of Rs.9,00,000/- (Rupees Nine

Lakh) and in default of payment of the fine, to undergo simple

imprisonment for six months.

3. Briefly stated, the admitted facts of the case leading to the

present Appeal are that the complainant and accused, being

acquainted with each other, entered into an agreement in

December 2010 whereby a hand loan of Rs.4,50,000/ - (Rupees

Four Lakh and Fifty Thousand) was extended by the complainant

to the accused for the purpose of purchase of a house site. It was

further agreed by the parties that the said loan would be paid by

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the accused within a period of one year with interest at the rate of

16% per annum.

3.1 Thereafter, the accused issued a cheque bearing No.524714

dated 20.03.2013 in favour of the complainant drawn upon ICICI

Bank, Malleshwaram Branch, Bengaluru. The said cheque was

presented for encashment by the complainant before State Bank of

India, Magadi Road Branch, Bengaluru which was returned on

22.03.2013 with remark “funds insufficient”. Aggrieved, the

complainant served a legal notice on the accused on 28.03.2013

demanding that the sum of Rs.4,50,000/- (Rupees Four Lakh and

Fifty Thousand) alongwith interest be paid within fifteen days from

the date of receipt of the said legal notice.

3.2 Aggrieved by the inaction and non-repayment of the hand

loan extended, the complainant filed a complaint on 06.05.2013

being Complaint Case No.12108 of 2013 under Section 200 of the

Code of Criminal Procedure, 1973 read with Section 138 of the NI

Act before the Court of XII Additional Chief Metropolitan

Magistrate, Bengaluru.

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3.3 When the matter stood thus, the accused sent a legal notice

dated 16.09.2014 to the complainant and one S.B.

Ramachandraiah (who was later examined by the trial court as

Prosecution Witness No.2) imploring the latter to return his blank

cheques and blank documents that were allegedly deposited by the

accused as a security for a hand loan of Rs.40,000/- (Rupees Forty

Thousand) that was extended to him by S.B. Ramachandraiah.

3.4 On 01.09.2015, the accused was convicted by the Court of

the XII Additional Chief Metropolitan Magistrate, Bangalore under

Section 138 of the NI Act in the Complaint Case and was sentenced

to pay a fine of Rs.9,00,000/- (Rupees Nine Lakh), in default

whereof he was directed to undergo simple imprisonment for six

months. The trial court, while convicting the accused, held that the

signature on the cheque admittedly belonged to the accused and

that the said cheque was dishonoured due to insufficiency of

funds. It was further observed that even though the legal notice

dated 28.03.2013 was not received by the accused personally,

nevertheless, it was addressed to the accused and there was

nothing on record to believe that the accused was not residing at

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the address shown in the legal notice and therefore on the basis of

acknowledgment and correctness of address of the accused, the

notice was deemed to have been served upon him. Furthermore, it

was held by the trial court that the complainant had complied with

all the requirements of Sections 138 to 142 of the NI Act and

therefore presumptions under Sections 118 and 139 of the NI Act

were raised in favour of the complainant and the said

presumptions were not rebutted by the defence of the accused and

hence making him liable to be punished under the rigours of

Section 138 of the NI Act.

3.5 Aggrieved by the order dated 01.09.2015 of the trial court, the

accused preferred Criminal Appeal No.1224 of 2015 before the

Court of LXV Additional City Civil and Sessions Judge, Bangalore

which was dismissed vide judgment dated 19.09.2016 by affirming

the findings of the trial court. However, the order of sentence was

modified to the extent of fine imposed, which was reduced from

Rs.9,00,000/- (Rupees Nine Lakh) to Rs.6,50,000/-(Rupees Six

Lakh and Fifty Thousand).

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3.6 Aggrieved by the judgment dated 19.09.2016 of the Appellate

Court, the accused preferred a Criminal Revision Petition No.1502

of 2016 before the Karnataka High Court with a prayer to set aside

the judgment dated 19.09.2016 passed in Criminal Appeal

No.1224 of 2015 and judgment dated 01.09.2015 passed in the

Criminal Complaint No.12108 of 2013 convicting him.

3.7 The High Court, by the impugned order dated 06.10.2023 and

while exercising its revisional jurisdiction, allowed the criminal

revision petition preferred by the accused and set aside the

conviction and sentence recorded by the trial court, and acquitted

him under Section 138 of NI Act by observing that the complainant

had failed to disclose from which of his relatives he had taken

money to extend the hand loan to the accused. It was further

observed that the complainant has failed to provide any

explanation with respect to the need for the complainant to avail a

loan from his relatives and friends and then advance the same to

the accused without charging any interest. Further, no date was

disclosed by the complainant as the date of advancement of the

loan. The High Court, upon scrutiny of evidence, observed that the

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complainant has failed to elucidate and explain as to how the

amount of Rs.3,00,000/-(Rupees Three Lakh) was mobilised while

his monthly income was between Rs.20,000/ - (Rupees Twenty

Thousand) to Rs.25,000/- (Rupees Twenty Five Thousand) .

Therefore, in view of the aforesaid, it was highly improbable that a

loan to the tune of Rs.4,50,000/- (Rupees Four Lakh and Fifty

Thousand) was advanced without charging any interest and

thereby the complainant failed to satisfy the court that he had the

financial capacity to advance such a huge amount which was

completely disproportionate to his monthly income. Therefore,

giving the benefit of doubt to the accused, the High Court observed

that he was able to successfully discharge and rebut the

presumption in favour of the complainant by exposing the financial

incapacity of the complainant to extend the said loan and thereby

acquitting him and setting aside the concurrent findings of the

courts below.

3.8 Aggrieved by the impugned judgment and order dated

06.10.2023, the complainant has preferred the present criminal

Appeal praying for setting aside of the impugned order and

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restoration of the judgment dated 01.09.2015 of the trial court as

affirmed by the Appellate Court along with fine.

4. We have heard the learned counsel for the complainant-

appellant and the learned counsel for the accused-respondent. We

have perused the material on record.

4.1 Learned counsel for the complainant contends that the

impugned order proceeds on an erroneous premise in placing

reliance upon the complainant’s monthly income to infer absence

of financial capacity to advance a sum of Rs.4,50,000/- (Rupees

Four Lakh and Fifty Thousand). It was argued that such an

approach is contrary to the settled position of law as no initial

burden lies upon the complainant once the presumption under

Sections 118 and 139 of the NI Act is satisfied. It was further

contended that the accused neither produced any additional

evidence nor demonstrated any cogent material to rebut the

presumption under Section 139 of the NI Act. In fact, it was

contended that the accused only produced legal notice sent post-

facto and some oral evidence, but no reliable evidence was

produced by the accused to rebut the presumption under Section

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139 of the NI Act. Lastly, it was argued that the High Court had

committed an error by allowing the revision petition preferred by

the accused and therefore should be set aside in the interest of

justice.

4.2 Per contra, learned counsel for the accused, while opposing

the appeal preferred by the complainant, submitted that on

10.10.2010, the accused took a hand loan of Rs.40,000/- (Rupees

Forty Thousand) from one S.B. Ramachandraiah (the Prosecution

Witness No.2 in the Complaint Case). In such circumstances, the

accused had handed over two blank cheques along with a

promissory note and a signed white blank paper. The said

documents were later misused by the complainant who is a relative

of the said Prosecution Witness No.2 (for short, “PW-2”). It was

further contended by the learned counsel that the complainant

failed to specify exact timelines of the alleged transaction as he

failed to disclose specific source, date, time and contemporaneous

material to substantiate the alleged hand loan in favour of the

accused. It was further contended by the learned counsel that the

complainant had admitted his income was Rs.20,000/ - (Rupees

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Twenty Thousand) to Rs.25,000/- (Rupees Twenty Five Thousand)

per month and therefore it would not be possible for him to lend a

hand loan of Rs.4,50,000/ - (Rupees Fourt Lakh and Fifty

Thousand) to the accused. It was also the case of the complainant

that he had received amounts from his relatives i.e., the PW-2 along

with Sri Nagaraj and others to lend money to the accused. However,

the complainant admitted that the aforementioned names were not

specified in the Complaint dated 06.05.2013 and hence it

established the fact that the complainant improvised his false case

and the witnesses produced had been staged by him. Further, it

was contended that the contention of the complainant is highly

improbable as no prudent person would receive multiple hand

loans to lend the same as a loan to a third party as he had admitted

that there was no written agreement between him and the accused

for the alleged transaction. The complainant, it was contended, had

admitted that there was no documentary evidence to show that he

was in possession of Rs.4,50,000/- (Rupees Four Lakh and Fifty

Thousand) with him at the time of issuance of the alleged hand

loan. The learned counsel for the accused further submitted that

the complainant failed to independently establish a legally

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enforceable debt even though he admitted that the signature on

the cheque differs from the signature on acknowledgment and

therefore failed to establish a legally enforceable debt. In

consideration of aforementioned admissions, it was contended by

the learned counsel for the accused that PW-2 admitted that there

was no documentary evidence to establish that the complainant

received an amount of Rs.1,00,000/- (Rupees One Lakh) from him

and therefore the High Court was correct in setting aside the

concurrent judgments of conviction passed by the lower courts.

5. Before delving into the contentions of the parties and

appreciation of facts, we wish to underline the aims and objectives

of Chapter XVII (Sections 138 to 148) of NI Act which was inserted

by Act 66 of 1988 w.e.f. 01.04.1989. The scope and intent of

bringing the said Chapter in the statute is to inculcate faith in the

efficacy of banking operations and credibility in transacting

business on negotiable instruments. It is to enhance the

acceptability of cheque in settlement of liabilities by making the

drawer liable for penalties in case of bouncing of cheques due to

insufficient arrangements made by the drawer, with adequate

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safeguards to prevent harassment of honest drawers. This chapter

has been introduced to prevent dishonesty on the part of the

drawer of negotiable instruments to draw a cheque without

sufficient funds in the account maintained by him in the bank and

induce the payee or holder-in-due-course to act upon it. In other

words, these provisions have been introduced to give greater

credibility to our trade, business, commerce and industry, which

is absolutely imperative in view of the growing international trade

and business. In this regard, it would be apposite to rely on the

judgment of this Court in Dalmia Cement (Bharat) Ltd. v s.

Galaxy Traders & Agencies Ltd ., (2001) 6 SCC 463.

5.1 Section 138 of the NI Act aims to enhance the acceptability of

cheque in settlement of liabilities and by making the drawer liable

for penalties in case of bouncing of cheques due to insufficient

arrangements made by the drawer with adequate safeguards to

prevent harassment of honest drawers. The said section is

extracted as hereunder:

“138. Dishonour of cheque for insufficiency, etc., of

funds in the account.—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

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from out of that account for the discharge, in whole or in

part, of any debt or other liability, is returned by the bank

unpaid, either because of the amount of money standing

to the credit of that account is insufficient to honour the

cheque or that it exceeds the amount arranged to be paid

from that account by an agreement made with that bank,

such person shall be deemed to have committed an offence

and shall, without prejudice to any other provision of this

Act, be punished with imprisonment for a term which may

be extended to two years’, or with fine which may extend

to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply

unless—

(a) the cheque has been presented to the bank within a

period of six months from the date on which it is drawn or

within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as

the case may be, makes a demand for the payment of the

said amount of money by giving a notice; in writing, to the

drawer of the cheque, within thirty days of the receipt of

information by him from the bank regarding the return of

the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of

the said amount of money to the payee or, as the case may

be, to the holder in due course of the cheque, within fifteen

days of the receipt of the said notice.

Explanation.—For the purposes of this section, “debt or

other liability” means a legally enforceable debt or other

liability.”

5.2 Section 138 of the NI Act, which is a penal provision, provides

that wherever any cheque drawn by a person for discharge of any

liability is returned by the bank unpaid for the reason of

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insufficiency of the amount of money standing to the credit of the

account on which the cheque was drawn or for the reason that it

exceeds the arrangements made by the drawer of the cheque with

the banker for that account, the drawer of such cheque shall be

deemed to have committed an offence. In that case, the drawer,

without prejudice to the other provisions of the said Act, shall be

punishable with imprisonment for a term which may extend to two

years, or with fine which may extend to twice the amount of the

cheque, or with both.

5.3 At this juncture, it is pertinent to highlight the key ingredients

as highlighted by this Court in the case of Kusum Ingots & Alloys

Ltd. vs. Pennar Peterson Securities Ltd., (2000) 2 SCC 745.

“10. On a reading of the provisions of Section 138 of the NI

Act it is clear that the ingredients which are to be satisfied

for making out a case under the provision are:

(i) a person must have drawn a cheque on an account

maintained by him in a bank for payment of a certain

amount of money to another person from out of that

account for the discharge of any debt or other liability;

(ii) that cheque has been presented to the bank within

a period of six months from the date on which it is

drawn or within the period of its validity, whichever is

earlier;

(iii) that cheque is returned by the bank unpaid, either

because the amount of money standing to the credit of

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the account is insufficient to honour the cheque or

that it exceeds the amount arranged to be paid from

that account by an agreement made with the bank;

(iv) the payee or the holder in due course of the cheque

makes a demand for the payment of the said amount

of money by giving a notice in writing, to the drawer of

the cheque, within 15 days of the receipt of

information by him from the bank regarding the return

of the cheque as unpaid;

(v) the drawer of such cheque fails to make payment of

the said amount of money to the payee or the holder

in due course of the cheque within 15 days of the

receipt of the said notice.

11. If the aforementioned ingredients are satisfied then the

person who has drawn the cheque shall be deemed to have

committed an offence. In the explanation to the section

clarification is made that the phrase “debt or other

liability” means a legally enforceable debt or other

liability.”

5.4 The ingredients of the offence under Section 138 are as

follows:

i. The drawing of a cheque by a person on an account

maintained by him with the banker for the payment of

any amount of money to another from that account.

ii. The cheque being drawn for the discharge in whole or

in part of any debt or other liability.

iii. Presentation of cheque to the bank within the period

of six months or within the period of its validity.

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iv. The return of the cheque by the drawee bank as

unpaid either because the amount of money standing

to the credit of that account is insufficient to honour

the cheque or that it exceeds the amount arranged to

be paid from that account.

v. A notice by the payee or the holder in due course

making a demand for the payment of the amount to

the drawer of the cheque within thirty days of the

receipt of information from the bank in regard to the

return of the cheque.

vi. Failure of the drawer of the cheque to make payment

of the amount of money to the payee or the holder in

due course within fifteen days of the receipt of the

notice.

vii. Filing of the complaint within a month from the date

of expiry of the grace period of fifteen days before a

Metropolitan Magistrate or a Judicial Magistrate not

below first class.

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5.5 At this juncture we find it appropriate to deal with certain

presumptions that flow from the NI Act with respect to cheques

drawn in favour of the payee or the holder in due course. Section

118 of the NI Act provides for certain special rules of evidence. The

said provision is extracted as hereunder:

“118. Presumptions as to negotiable instruments. —

Until the contrary is proved, the following presumptions

shall be made:—

(a) of consideration:—that every negotiable instrument

was made or drawn for consideration, and that every such

instrument, when it has been accepted, indorsed,

negotiated or transferred, was accepted, indorsed,

negotiated or transferred for consideration;

(b) as to date:—that every negotiable instrument bearing

a date was made or drawn on such date;

(c) as to time of acceptance:—that every accepted bill of

exchange was accepted within a reasonable time after its

date and before its maturity;

(d) as to time of transfer:—that every transfer of a

negotiable instrument was made before its maturity;

(e) as to order of indorsements:—that the indorsements

appearing upon a negotiable instrument were made in the

order in which they appear thereon;

(f) as to stamp:— that a lost promissory note, bill of

exchange or cheque was duly stamped;

(g) that holder is a holder in due course: —that the

holder of a negotiable instrument is a holder in due course:

Provided that, where the instrument has been

obtained from its lawful owner, or from any person in

lawful custody thereof, by means of an offence or fraud, or

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has been obtained from the maker or acceptor thereof by

means of an offence or fraud, or for unlawful

consideration, the burden of proving that the holder is a

holder in due course lies upon him.”

Section 118 lays down certain special rules of evidence

relating to presumptions akin to Section 114 of the Indian Evidence

Act, 1872 (Section 119 of Bharatiya Sakshya Adhiniyam, 2023).

The rationale behind these presumptions is that negotiable

instruments such as cheque are passed from hand to hand on

endorsement and therefore it would make trading very difficult and

negotiability of instruments impossible, unless certain

presumptions are made. Section 118 of the NI Act provides

presumptions to be raised until the contrary is proved. Under

Section 118(a) of the NI Act, until the contrary is proved,

presumption shall be made that every negotiable instrument was

made for a consideration. Once there is admission that the

execution of a cheque or the same is proved to have been executed,

the presumption under Section 118(a) is raised that it is supported

by consideration. Similar presumptions are made in the sub -

clauses (b) to (g) of Section 118. Presumption under Section 118(b)

relates to the date on which negotiable instruments were and

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statutory presumption is that the said instrument was drawn or

made on such date unless the contrary is proven. With respect to

the time of acceptance, it is presumed under Section 118(c) of the

NI Act that every bill of exchange including bill of exchange payable

on demand was accepted within a reasonable time after its issue

or before its maturity until the contrary is proven. Similar is the

presumption under Section 118(d), (e) and (f) which allows for

presumption that every transfer of negotiable instrument was

made before its maturity, every indorsement appearing upon a

negotiable instrument was made in order in which they appear,

every negotiable instrument that was lost was duly stamped

respectively. Lastly, the statutory presumption under Section

118(g) is that every holder of a negotiable instrument shall be

considered as a holder in due course i.e. he is presumed to have

paid the consideration for the instrument and in good faith.

5.6 Now, coming to Section 139 of the NI Act, the said section

raises the presumption that unless the contrary is proved, it shall

be presumed that the holder of the cheque had received the cheque

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for the discharge, in whole or in part, of any debt or other liability.

The said section is extracted as hereunder:

“139. Presumption in favour of holder. —It shall be

presumed, unless the contrary is proved, that the holder

of a cheque received the cheque of the nature referred to

in section138 for the discharge, in whole or in part, of any

debt or other liability.”

The presumption as envisaged under Section 139 is a statutory

and mandatory presumption and not a discretionary one. Under

Section 139 of the NI Act, there is presumption that the holder of

the cheque has received it for the discharge of debt or other

liability. To understand the spirit of Sections 138 to 147 of the NI

Act, Section 139 plays a vital role as the provision gives power to

the court to presume, unless the contrary is proved, that the holder

of the cheque received the cheque of the nature referred in Section

138 of NI Act for discharge in whole or part of debt or other liability.

The burden to displace the said presumption is on the drawer and

consequently, non-displacement of the said burden and

presumptions lead to a penal consequence wherein the accused

can be punished for imprisonment up to two years or with fine

which may extend to twice the amount of the cheque, or with both.

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Interpreting the provisions of Section 139 in Kumar

Exports vs. Sharma Carpets, (2009) 2 SCC 513 this Court has

observed as under:

“17. Section 118 of the Act, inter alia, directs that it shall

be presumed, until the contrary is proved, that every

negotiable instrument was made or drawn for

consideration. Section 139 of the Act stipulates that unless

the contrary is proved, it shall be presumed that the holder

of the cheque received the cheque, for the discharge of

whole or part of any debt or liability.

18. Applying the definition of the word “proved” in Section

3 of the Evidence Act to the provisions of Sections 118 and

139 of the Act, it becomes evident that in a trial under

Section 138 of the Act a presumption will have to be made

that every negotiable instrument was made or drawn for

consideration and that it was executed for discharge of

debt or liability once the execution of negotiable

instrument is either proved or admitted. As soon as the

complainant discharges the burden to prove that the

instrument, say a note, was executed by the accused, the

rules of presumptions under Sections 118 and 139 of the

Act help him shift the burden on the accused. The

presumptions will live, exist and survive and shall end only

when the contrary is proved by the accused, that is, the

cheque was not issued for consideration and in discharge

of any debt or liability. A presumption is not in itself

evidence, but only makes a prima facie case for a party for

whose benefit it exists.

19. The use of the phrase “until the contrary is proved” in

Section 118 of the Act and use of the words “unless the

contrary is proved” in Section 139 of the Act read with

definitions of “may presume” and “shall presume” as given

in Section 4 of the Evidence Act, makes it at once clear

that presumptions to be raised under both the provisions

are rebuttable. When a presumption is rebuttable, it only

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points out that the party on whom lies the duty of going

forward with evidence, on the fact presumed and when

that party has produced evidence fairly and reasonably

tending to show that the real fact is not as presumed, the

purpose of the presumption is over.”

5.7 A conjoint and harmonious reading of the aforesaid

provisions clearly indicate towards the statutory presumption that

every negotiable instrument was made or drawn for consideration

and that it was executed for discharge of debt or liability once the

execution of the negotiable instrument is either approved or

admitted. As soon as the complainant discharges the burden to

prove that the instrument was executed by the drawer, the rules of

presumption under Sections 118 and 139 of the NI Act help him

and shift the burden of rebutting the said presumptions upon the

said drawer. Since these presumptions are rebuttable

presumptions, the accused has the burden of disproving the same

by leading evidence, either direct or indirect to the effect that there

did not exist any consideration or debt or that the non-existence of

the said debt or consideration is so probable that a prudent man

ought to suppose that no consideration or debt existed. However,

a bare denial of the passing of any consideration or existence of

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any debt does not support the defence of the accused and therefore

to disprove the presumptions, something which is probable has to

be brought on record for getting the burden of proof shifted back

to the complainant. The accused has to bring on record such facts

and circumstances, upon consideration of which the court may

either believe that the consideration and the debt did not exist or

their non-existence was so probable that a prudent man would,

under the circumstances of the case, act upon the plea that it did

not exist.

6. Now, coming to the facts of the present case, upon perusal of

the documents and material on record, it is evident that the

accused has admitted his signature on the cheque as a drawer and

therefore the complainant becomes the holder in due course. Upon

admission of execution of the impugned cheque, the Court is

required to invoke the statutory presumption with reference to

Sections 118 and 139 of the NI Act until the contrary is proven i.e.

the said cheque was drawn and issued for a consideration. It also

has to be presumed, unless the contrary is proven, that the cheque

was bearing the same date on which it was drawn or made; that

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the holder of the said cheque was the holder in due course and had

received the said cheque for discharge of whole or a part of any

debt or liability. Since the signature on the cheque has not been

disputed as that of the accused i.e. the drawer, the presumption

under Section 118 and Section 139 ought to be invoked against the

accused so as to make him liable under Section 138 of the NI Act.

6.1 Now, to constitute an offence under Section 138 of the NI Act,

the complainant has to put forth evidence on record to fulfil the

ingredients constituted under the said section. Such evidence

would include documents such as legal notice of demand owing to

non-payment of cheque issued by the accused, cheque return

memo from the bank. 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.

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6.2 As apparent from the bare perusal of the record, the

complainant herein received the cheque bearing No.524714 dated

20.03.2013 drawn by the accused for a sum of Rs.4,50,000/ -

(Rupees Four Lakh and Fifty Thousand). The said cheque was

presented before the State Bank of India, Magadi Road Branch,

Bengaluru on 20.03.2013 i.e. within the period of six months as

envisaged under Section 138(a). Thereafter, the said Bank issued

a return memo with respect to the cheque bearing No.524714

stating that the said cheque was dishonoured owing to

insufficiency of funds in the accused’s bank account. In

consequence of the return memo received by the complainant, a

legal notice was issued to the accused on 28.03.2013 demanding

the cheque amount of Rs.4,50,000/-(Rupees Four Lakh and Fifty

Thousand) as apparent from the legal notice annexed with the

present Appeal. The said demand through the legal notice was

made within the statutory outer limit of thirty days as envisaged

under Section 138(b) of the NI Act. Lastly, the said payment was

not made by the accused within a period of fifteen days from the

receipt of the said legal notice as required by Section 138(c) and

thereafter the complaint being Complaint Case No.12108 of 2013

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was filed before the Court of XII Additional Chief Metropolitan

Magistrate, Bangalore on 06.05.2013. A fortiori, upon compliance

with the statutory mandate as envisaged under Section 138 of NI

Act, the complainant was able to trigger the invocation of

presumptions under Sections 118 and 139 of the N I Act and

thereby shifting the onus of proof upon the accused to disprove his

liability.

6.3 Once the rigours of Section 138 are satisfied, the onus of proof

shifts upon the accused to prove his defence and with cogent

evidence and so as to demonstrate how the offence under the said

Section is not made out. Upon perusal of the written submissions

and arguments advanced by the learned counsel for the accused

in defence, we come to the conclusion that a frivolous and feeble

attempt has been made to rebut the allegations put forth in the

complaint. It is the case of the accused that the complainant has

misused a blank cheque that had been handed over by him to S.B.

Ramachandraiah (PW-2) as security for a hand loan of Rs.40,000/-

(Rupees Forty Thousand) which was allegedly advanced to him by

S.B. Ramachandraiah (PW-2). The accused has further contended

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that upon repayment of the said loan, he demanded that the said

cheques be returned to him but the same were misplaced. However

the accused has failed to put forth any evidence to support the said

contentions made by him. What is apparent, upon perusal of the

documents placed on record, is that the accused has relied upon

his own testimony as Defence Witness No.1 (DW-1), and of Defence

Witness No.2 (DW-2), one Manjunatha who has supported the

version of the accused alongwith legal notice dated 16.09.2014

issued to S.B. Ramachandraiah and the complainant, postal

receipts and acknowledgments with respect to the said legal notice.

However, upon perusal of the aforesaid oral evidence and the

limited documentary evidence, we are not satisfied with the defence

of the accused as there is no documentary evidence to support the

contention of the accused that he had borrowed Rs.40,000/ -

(Rupees Forty Thousand) from S.B. Ramachandraiah. There is no

receipt or endorsement to evince the fact that the said loan was

ever repaid by the accused. Furthermore, even if this Court accepts

the argument of the accused that a blank cheque was given by the

accused which was later misplaced by S.B. Ramachandriah, we fail

to see any step that was undertaken by the accused to recover the

28

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 accused

has relied upon the legal notice dated 16.09.2014 that was

addressed to the complainant and to S.B. Ramachandraiah

wherein for the first time, a demand was made by the accused for

the return of the said cheque and document. However, we cannot

help but take note of the fact that the said legal notice was issued

only on 16.09.2014 whereas the Complaint Case No.12108 of 2013

was filed on 06.05.2013. Furthermore, by the time the said legal

notice was issued, the evidence of PW-1 was already complete and

therefore the said legal notice cannot come in as an aid and

assistance to the accused. This indubitably points out towards ex

post facto creation of evidence, an afterthought and an attempt to

create documentary evidence to create artificial defence. Therefore,

the said legal notice has no evidentiary value to support the case

of the accused as the same was sent by the accused after the

commencement of the complaint case against him.

29

6.4 On the contrary, the said line of defence has to be

countenanced with the evidence, oral and documentary put forth

by the complainant that is consistent with the guilt of the accused.

The complainant, in support of his case, has placed before this

Court his testimony before the trial court as PW-1, testimony of

S.B. Ramachandraiah as PW-2, testimony of one, Nagaraj as PW-3

along with documentary evidence such as the legal notice dated

28.03.2013, acknowledgements and receipts related to the same.

Upon close scrutiny of the testimonies put forth by PW-1, PW-2

and PW-3, this Court is able to discern a clear statement of fact

that is consistent with the story of the complainant and that he, in

the second week of December 2010 was approached by the accused

for a hand loan of Rs.4,50,000/- (Rupees Four Lakh and Fifty

Thousand). The said loan was required for the purpose of purchase

of a land site at Vignewshwara Nagara Sunkadakatte, Bangalore.

The extending of the said loan amount was facilitated on the basis

of cash credit facility extended to the complainant by the PW-2 and

PW-3 for an amount of Rs.1,00,000/- (Rupees One Lakh) given on

08.12.2010 and Rs.50,000/- (Rupees Fifty Thousand) given on

05.12.2010 respectively. This is further substantiated by the

30

examinations-in-chief of PW-2 and PW-3. PW-2 in his statement

has stated that:

“I know the complainant. He is my relative. The

complainant borrowed Rs.1,00,000/ - from me on

08.12.2010. He borrowed the said amount for purchasing

a site. He promised me to repay it within three months,

but he did not repay within time. On enquiry, he stated

that his amount was struck with the accused. Then myself

and the complainant went to the accused and asked him

to repay the money which he was in due to the

complainant. On persistent demand, the accused issued

cheque for Rs. 4,50,000/-in favour of the complainant in

the year 2013. I came to know that the said cheque was

dishonored. I have demanded the repayment of the

amount, but the complainant has stated that he has filed

a complaint against the accused and is waiting for its

result.”

Further, the PW-3 in his examination has stated:

“I know the complainant. His native is situated near my

village and he used to come to my bakery. I have financial

transaction with the complainant. He borrowed

Rs.50,000/- from me on 05.12.2010. He promised me to

repay it within 2-3 months, but he did not repay within

time. On enquiry, he stated that his amount is struck with

some person and he has filed a case against him. He says

that cheque issued by the said person is bounced and he

will pay within 6 months”

Upon perusal of the aforesaid statements made by the PW-2

and PW-3, there appears a consonance with the case of the

complainant that in order to extend loan of Rs.4,50,000/- (Rupees

Four Lakh and Fifty Thousand) in favour of the accused, the

31

complainant had taken financial assistance from his friends and

families. Upon perusal of cross-examination conducted by the

counsel of accused upon the testimonies of PW -2 and PW-3,

nothing has been elicited that disregards or discredits the case of

the complainant. On the contrary, PW-2 has categorically denied

the existence of any involvement with respect to the alleged loan of

Rs.40,000/- (Rupees Forty Thousand) that was allegedly extended

by him to the accused and which was later allegedly repaid.

6.5 When the said testimonies along with the documentary

evidence put forth by the complainant are viewed in totality, the

inevitable conclusion that was correctly drawn by the trial court

and the Appellate Court stands justified and the burden of proof

that the accused had taken a loan of Rs.4,50,000/- (Rupees Four

Lakh and Fifty Thousand) from the complainant stands

discharged. After the said discharge of burden of proof, the onus of

rebutting the same was upon the accused so as to lead cogent

evidence so as to prove that there indeed was a misappropriation

of the cheque that was issued by him in favour of the PW-2 which

was misappropriated by him and the complaint so as to concoct a

32

false case of prosecution against him. The accused has only relied

upon plausible theories, conjectures and surmises with no

evidence to support the same and thus his defence deserves to fail.

6.6 Another strand of defence taken by the accused is the

incapacity of the complainant to extend the loan amount of

Rs.4,50,000/- (Rupees Four Lakh and Fifty Thousand). To this

effect, he has relied upon the statement made by the complainant

as PW-1 wherein he stated that his monthly income was of

Rs.20,000/- (Rupees Twenty Thousand) to 25,000/- (Rupees

Twenty Five Thousand) per month and owing to such financial

capacity, he was not in a position to extend a loan amount of

Rs.4,50,000/- (Rupees Four Lakh and Fifty Thousand). This line of

defence of the accused does not hold much water upon perusal of

the statement made by the complainant in his examination -in-

chief. On close perusal, the statement reveals that the complainant

routinely used to invest in other business ventures such as chit

funds wherein he has suggested different investments up to

Rs.2,00,000/- (Rupees Two Lakh) which clearly establishes that he

had the financial capacity to extend the loan amount as demanded

33

by the accused. The financial capacity of the complainant was

further bolstered by the hand loans extended by PW-2 and PW-3

which has been corroborated by their statements made during

examination-in-chief. The said testimonies were subjected to

intensive cross-examination as well wherein nothing of substance

was elicited to shake their veracity and therefore the trial court and

the Appellate Court were right in relying upon and basing their

conviction on the same.

6.7 Furthermore, the failure of the accused to respond to the

statutory notice issued under Section 138 of the NI Act gives rise

to an inference that the complainant's version carries merit. The

initial burden of raising a defence that the complainant lacked the

financial capacity to advance the loan rests upon the accused and

ought to have been specifically pleaded in the reply to the demand

notice. In the absence of such a plea, the complainant cannot be

expected, to adduce evidence establishing his financial capacity to

pay the loan to the accused while leading his evidence. The accused

may discharge this burden by producing independent witnesses or

documentary evidence to demonstrate the complainant ’s lack of

34

financial means. Alternatively, he may rely upon the materials

produced by the complainant himself or establish the same

through an effective cross-examination of the complainant and his

witnesses. In the facts of the present case, no such contra material

has been placed on record before us to further the case of the

accused that the complainant did not have any means to extend

the hand loan and therefore the argument and defence of the

accused on this aspect falls flat.

6.8 Lastly, learned counsel for the accused contended that the

complainant failed to independently establish a legally enforceable

debt and that he failed to disclose or specify the exact timeline of

the transaction to substantiate the hand loan extended in his

favour. In this context, we would like to underline the admitted fact

that the signature on the cheque is that of the accused. Apropos,

once the signature on the cheque stands proved, the necessary

corollary is that the accused was aware about the contents of the

said cheque unless the contrary is proven which is not so in the

present case.

35

6.9 Another necessary implication arising out of the said

admission is the presumption under Section 139 of the NI Act

which has been discussed at length by us in the preceding

paragraphs. The presumption that the impugned cheque was

issued to discharge in part or whole, a liability that accrued to the

drawer has to be rebutted by the accused by leading cogent

material evidence. Once the said presumption is invoked, the onus

shifts upon the accused to prove that the said cheque was not

issued for discharge of any liability, in this case, the alleged hand

loan of Rs.4,50,000/- (Rupees Four Lakh and Fifty Thousand). In

our opinion, the accused in the present case has not been able to

satisfy this Court that there existed other supervening

circumstances under which the said cheque was issued under

dubious circumstances or that the same was misappropriated by

the complainant. Moreover, the material placed on record by him

in his defence is weak and not capable to dislodge the strong

presumption of conviction that has been raised due to concurrent

conviction by the trial court and the Appellate Court. On the

contrary, the complainant has been able to adduce evidence with

respect to the hand loan of Rs.4,50,000/- (Rupees Four Lakh and

36

Fifty Thousand) extended to the accused in the month of December

2010. The said transaction has been corroborated by the PWs-2

and 3 who have categorically stated that in the said month, the

complainant had approached them for financial assistance in order

to secure credit facilities so as to enable him to extend a hand loan

to the accused.

6.10 As already observed, the said testimonies have been put

through cross-examination by the opposing counsel and nothing

has been elicited so as to shake its credibility. Thereafter, upon

return of cheque after its presentment due to insufficiency of

funds, a legal notice in compliance with the rigours of Section 138

of NI Act was issued and thereupon a complaint was lodged before

the Magistrate which led to the culmination of Complaint Case

No.12108 of 2013. The said chain of events right from the return

of cheque, until the filing of the complaint case was done within

the contours of law and procedural mandate as ordained in

Chapter XVII (Sections 138 to 148) of the NI Act and therefore, we

fail to find any merit in the submission of the learned counsel for

the accused that the complainant failed to delineate proper

37

sequence of time and chain of events beginning from issuance of

hand loan to the filing of complaint. We therefore hold that the High

Court erred in reversing well-reasoned and concurrent findings of

conviction and sentence of the lower courts while exercising its

extremely limited revisional jurisdiction.

7. Before parting, we would like to accentuate upon the

revisional jurisdiction of the High Courts and the contours and

inherent limits while exercising powers as a revisional authority.

Section 397 of Code of Criminal Procedure, 1973 (now, Section 438

of Bharatiya Nagarik Suraksha Sannhita, 2023) encapsulates the

power of High Courts and Session Courts to examine the

correctness, legality or propriety of any order passed by an inferior

criminal court. The said Section is extracted as hereunder:

“438. Calling for records to exercise powers of

revision.—(1) The High Court or any Sessions Judge may

call for and examine the record of any proceeding before

any inferior Criminal Court situate within its or his local

jurisdiction for the purpose of satisfying itself or himself as

to the correctness, legality or propriety of any finding,

sentence or order, recorded or passed, and as to the

regularity of any proceedings of such inferior Court, and

may, when calling, for such record, direct that the

execution of any sentence or order be suspended, and if

the accused is in confinement that he be released on his

38

own bond or bail bond pending the examination of the

record.

Explanation.—All Magistrates, whether Executive or

Judicial, and whether exercising original or appellate

jurisdiction, shall be deemed to be inferior to the Sessions

Judge for the purposes of this subsection and of section

439.

(2) The powers of revision conferred by sub-section (1) shall

not be exercised in relation to any interlocutory order

passed in any appeal, inquiry, trial or other proceeding.

(3) If an application under this section has been made by

any person either to the High Court or to the Sessions

Judge, no further application by the same person shall be

entertained by the other of them.”

Discretion in the exercise of revisional jurisdiction should be

exercised within the four corners of this section whenever there has

been miscarriage of justice. However, while exercising power under

this section, the Court does not act as an appellate Court and

therefore while considering the legality, propriety or the

correctness of a finding or a conclusion, the revisional court does

not and should not dwell upon the facts and the evidence of the

case as 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

39

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.

7.1 This Court, in the State of Maharashtra vs. Jagmohan

Singh Kuldip Singh Anand, (2004) 7 SCC 659 observed that the

High Court, in exercise of its revisional jurisdiction, cannot embark

upon an in-depth roving re-examination of the oral evidence and

medical evidence and come to a conclusion contrary to the

consistent one reached by two courts below. In the facts of the

present case, in the impugned judgment, the High Court gravely

erred in upsetting the concurrent findings of conviction of the trial

court and the Appellate Court by substituting its own conclusions

and reasoning on the merits of the case and thereby erred in setting

aside the well-reasoned and correct judgement and orders of the

trial and appellate courts.

7.2 Upon perusal of the impugned judgment and order dated

06.10.2023, it is apparent that the High Court went into great

detail into each of the testimonies, documents and merits of the

40

case which could have been avoided especially when the subject

matter had come under its 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. In

State of Kerala vs. Puttumana Illath Jathavedan Namboodiri ,

(1999) 2 SCC 452, while considering the scope of the revisional

jurisdiction of the High Court this Court has laid down the

following:

“5. … In its revisional jurisdiction, the High Court can call

for and examine the record of any proceedings for the

purpose of satisfying itself as to the correctness, legality or

propriety of any finding, sentence or order. In other words,

the jurisdiction is one of supervisory jurisdiction exercised

by the High Court for correcting miscarriage of justice. But

the said revisional power cannot be equated with the power

of an appellate court nor can it be treated even as a second

appellate jurisdiction. Ordinarily, therefore, it would not

be appropriate for the High Court to reappreciate the

evidence and come to its own conclusion on the same

when the evidence has already been appreciated by the

Magistrate as well as the Sessions Judge in appeal, unless

any glaring feature is brought to the notice of the High

Court which would otherwise tantamount to gross

miscarriage of justice. On scrutinizing the impugned

judgment of the High Court from the aforesaid standpoint,

we have no hesitation to come to the conclusion that the

High Court exceeded its jurisdiction in interfering with the

conviction of the Respondent by reappreciating the oral

evidence. …”

41

7.3 The contours for exercise of revisional jurisdiction has been

well settled by the judicial dicta of this Court wherein time and

again it has been observed that the High Court shall not interfere

with the orders of the lower court unless:

i. The order or finding of the lower court is perverse,

grossly erroneous, glaringly unreasonable or wholly

unreliable or untenable in law.

ii. The lower court has passed the impugned order after

considering an immaterial or irrelevant material or no

material at all.

iii. There is a non-consideration of any relevant material

or the judicial discretion has been exercised arbitrarily

or capriciously.

7.4 This Court in Sanjabij Tari vs. Kishore S. Borcar, 2025

INSC 1158 in similar facts and circumstances wherein the High

Court had reversed concurrent findings of conviction under Section

138 of NI Act, while setting aside the impugned order, observed as

under:

42

“27. It is well settled that in exercise of revisional

jurisdiction, the High Court does not, in the absence of

perversity, upset concurrent factual findings. This Court

is of the view that it is not for the Revisional Court to re-

analyse and re-interpret the evidence on record. As held

by this Court in Southern Sales & Services and Ors. v.

Sauermilch Design and Handels GMBH, (2008) 14 SCC

457, it is a well-established principle of law that the

Revisional Court will not interfere, even if a wrong order is

passed by a Court having jurisdiction, in the absence of a

jurisdictional error.

28. Consequently, this Court is of the view that in the

absence of perversity, it was not open to the High Court in

the present case, in revisional jurisdiction, to upset the

concurrent findings of the Trial Court and the Sessions

Court.”

7.5 In the facts of the present case, we find that the High Court

has failed to highlight any reason or material satisfaction to the

effect that there was any such glaring contradiction or perversity

apparent on the face of the record so as to justify the exercise of

the powers under revisional jurisdiction and thereby erred in

interfering with the judgment and orders of the courts below.

Therefore, the present appeal has to be allowed by setting aside the

impugned order of the High Court. In view of the aforesaid

discussion, 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

43

Court in its judgment to enable it to exercise its revisional

jurisdiction for setting aside the conviction.

8. In view of the aforesaid findings and discussion, the

impugned order passed by the High Court is set aside and the

judgments as well as the orders of the trial court and Sessions

Court are restored. This appeal is allowed in the aforesaid terms.

…………………………………..J.

(B.V. NAGARATHNA)

…………………………………..J.

(UJJAL BHUYAN)

NEW DELHI;

AUGUST 04, 2026.