The Supreme Courtroom has held that there’s a statutory presumption that each negotiable instrument was made or drawn for consideration. A naked denial that no consideration was paid or that no debt existed will not be sufficient to assist the defence of an accused in a cheque dishonour case beneath Part 138 of the Negotiable Devices Act.
A Bench of Justices B V Nagarathna and Ujjal Bhuyan stated that to disprove the statutory presumptions, the accused should convey one thing possible on report to shift the burden of proof again to the complainant.
What should an accused show to rebut the presumption?
The accused has to convey on report such details and circumstances which, upon consideration, might lead the court docket to consider that the consideration and debt didn’t exist, or that their non-existence was so possible {that a} prudent particular person would, beneath the circumstances, act on the plea that they didn’t exist, the Courtroom stated.
The Bench made the observations whereas permitting an attraction filed by Kuntegowda in opposition to the Karnataka Excessive Courtroom’s October 6, 2023 judgment. The excessive court docket had put aside the order of a Bengaluru court docket which had held Thurubaiah responsible beneath Section 138 of the Negotiable Instruments Act and sentenced him to pay a high-quality of Rs 9 lakh.
The complainant had alleged that Thurubaiah issued a cheque in December 2010 in direction of reimbursement of a Rs 4.5 lakh hand mortgage taken to buy a web site. The cheque was dishonoured in March 2013, following which legal proceedings have been initiated.
Inspecting the matter, the Supreme Courtroom stated that because the accused had not disputed that the signature on the cheque was his, the presumptions beneath Sections 118 and 139 of the NI Act must be invoked in opposition to him, making him liable beneath Part 138 of the Act.
“If the court docket finds that the grievance was filed throughout the interval of limitation and the opposite necessities such because the presentment of cheque inside six months from the date on which it was drawn, demand of the stated quantity via authorized discover inside thirty days and non-repayment of the cheque quantity inside a interval of fifteen days thereafter are fulfilled, the court docket has to set in movement the wheel of legal equipment as envisaged beneath Part 138 of the NI Act,” Courtroom stated.
Why did the Supreme Courtroom reject the accused’s defence?
Within the current case, Courtroom discovered that the accused had made a “frivolous and feeble try” to rebut the allegations within the grievance.
The accused had claimed that he had borrowed Rs 40,000 from S.B. Ramachandraiah and had issued a clean cheque to him, which was later misused by the complainant.
The Supreme Courtroom rejected this defence, noting that the accused had taken no steps to recuperate the cheque or paperwork allegedly misappropriated by the complainant.
“We fail to notice any step that was undertaken by the accused to recuperate the stated cheques from him. No authorized motion has been undertaken by him to indicate that there was any try made by the accused for recovering the cheques and paperwork issued by him which have been allegedly misappropriated by the complainant herein,” the Bench stated.
Courtroom additionally discovered that the oral and documentary proof produced by the complainant was per the guilt of the accused.
The Bench rejected the defence that the complainant lacked the monetary capability to advance the Rs 4.5 lakh mortgage.
It identified that the accused’s failure to reply to the statutory discover issued beneath Part 138 of the NI Act gave rise to an inference that the complainant’s model carried advantage.
The preliminary burden of elevating a defence that the complainant lacked the monetary capability to advance the mortgage rests upon the accused and will have been particularly pleaded within the reply to the demand discover, Courtroom stated.
Within the absence of such a plea, the complainant can’t be anticipated to adduce proof establishing his monetary capability to advance the mortgage whereas main his proof, it added.
Courtroom additionally emphasised that after the signature on the cheque is proved, the required corollary is that the accused was conscious of the contents of the cheque except the opposite is proved. Within the current case, the opposite was not established.
Limits of revisional jurisdiction
The Bench additionally handled the scope of revisional jurisdiction and stated {that a} revisional court docket shouldn’t study the details and proof of a case like an appellate court docket.
“The court docket, in revision, considers the fabric solely to fulfill itself concerning the correctness, legality and propriety of the findings, sentence and order recorded by the decrease court docket, and will chorus from substituting its conclusion on an elaborate consideration of proof and the findings of the decrease courts shouldn’t be reversed merely on the bottom that an alternate view is feasible on the details of the case. On this case, such a place didn’t additionally emanate from the proof on report,” the Bench stated.
The Supreme Courtroom discovered that the excessive court docket had gone into nice element whereas inspecting the testimonies, paperwork and deserves of the case, though the matter was earlier than it in revisional jurisdiction.
“As an alternative, performing as an appellate court docket, the excessive court docket deemed it match to enter the deserves of the case, one thing which is usually impermissible except a obvious contradiction is clear on the face of report,” the Bench stated.
Courtroom held that the excessive court docket had didn’t determine any purpose or materials exhibiting a obvious contradiction or perversity on the face of the report that would justify the train of revisional jurisdiction.
It subsequently held that the excessive court docket had erred in interfering with the conviction.
“We’re of the view that the excessive court docket dedicated an error in setting apart the order of conviction in train of revisional jurisdiction. No ample floor has been talked about by the excessive court docket in its judgment to allow it to train its revisional jurisdiction for setting apart the conviction,” the Bench stated.
The Supreme Courtroom accordingly put aside the excessive court docket’s judgment and restored the judgments and orders of the trial court docket and Classes Courtroom.
Case Title: Kuntegowda Vs Thurubaiah
Bench: Justices B V Nagarathna and Ujjal Bhuyan
Date of Judgment: August 4, 2026
