The Supreme Court of India, in a bench comprising Justice B.V. Nagarathna and Justice Ujjal Bhuyan, held that High Courts exercising revisional jurisdiction under Section 397 of the Code of Criminal Procedure, 1973 (now Section 438 of the Bharatiya Nagarik Suraksha Sanhita, 2023) cannot act as appellate courts to re-appreciate evidence and reverse concurrent findings of conviction under Section 138 of the Negotiable Instruments Act, 1881, unless there is a glaring contradiction or perversity apparent on the face of the record. Setting aside a judgment of the Karnataka High Court, the apex court restored the orders of conviction and sentence passed against an accused in a cheque bounce case.
Background of the Case
In December 2010, the complainant, Kuntegowda, extended a hand loan of Rs 4,50,000 to the accused, Thurubaiah, for the purchase of a house site, with an agreement that the amount would be repaid within a year at an interest rate of 16% per annum. To discharge this obligation, the accused issued a cheque bearing No. 524714 dated March 20, 2013, for Rs 4,50,000 drawn on ICICI Bank, Malleshwaram Branch, Bengaluru.
When presented for encashment at State Bank of India, Magadi Road Branch, the cheque was returned unpaid on March 22, 2013, with the remark “funds insufficient.” The complainant served a legal notice on March 28, 2013, demanding payment within 15 days. Upon non-payment, a criminal complaint was filed on May 6, 2013, under Section 200 of the Code of Criminal Procedure, 1973 read with Section 138 of the Negotiable Instruments Act, 1881.
During the trial proceedings, the accused issued a legal notice dated September 16, 2014, claiming that blank cheques and signed documents deposited as security for a Rs 40,000 loan taken from one S.B. Ramachandraiah had been misplaced and misused.
On September 1, 2015, the XII Additional Chief Metropolitan Magistrate, Bangalore convicted the accused under Section 138 of the Negotiable Instruments Act, 1881 and sentenced him to pay a fine of Rs 9,00,000. The trial court noted that the signature on the cheque was admitted by the accused, and statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 were not successfully rebutted. The LXV Additional City Civil & Sessions Judge, Bangalore affirmed the conviction on September 19, 2016, while reducing the fine to Rs 6,50,000.
However, on October 6, 2023, the High Court of Karnataka, exercising revisional jurisdiction, allowed the revision petition filed by the accused and set aside the conviction, observing that the complainant failed to establish his financial capacity to extend a loan of Rs 4,50,000 when his monthly income was only between Rs 20,000 and Rs 25,000. Aggrieved by the acquittal, the complainant appealed to the Supreme Court.
Arguments of the Parties
Counsel for the complainant argued that once the execution of the cheque and signature were admitted, statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 arose in favor of the holder, shifting the burden onto the accused. It was contended that no initial burden lay on the complainant regarding financial capacity, and the accused failed to produce cogent material evidence to displace the presumption.
Counsel for the accused argued that the complainant lacked the financial capacity to advance Rs 4,50,000 given his monthly income of Rs 20,000 to Rs 25,000. It was asserted that the blank cheque had been given to S.B. Ramachandraiah (examined as PW-2) for a smaller loan of Rs 40,000 and was subsequently misused. The defense further argued that the complainant improvised his case by bringing witnesses not mentioned in the original complaint and failed to show documentary proof of having Rs 4,50,000 at the time the loan was given.
Court’s Analysis
Examining the statutory framework of Chapter XVII (Sections 138 to 148) of the Negotiable Instruments Act, 1881, the Supreme Court referred to Dalmia Cement (Bharat) Ltd. v. Galaxy Traders & Agencies Ltd. and Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd. to highlight the key statutory ingredients and objectives of penalizing dishonor of cheques—namely, enhancing the credibility of banking operations and commercial transactions.
The Court emphasized that Sections 118 and 139 of the Negotiable Instruments Act, 1881 mandate a statutory presumption that every negotiable instrument was executed for consideration and for the discharge of a legally enforceable debt or liability once execution is proved or admitted. Citing Kumar Exports v. Sharma Carpets, the Court highlighted:
“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.”
Applying these principles, the bench observed that all statutory prerequisites under Section 138 were satisfied by the complainant within the prescribed periods of limitation. Since the accused admitted his signature on the cheque, the burden shifted to him to rebut the presumption.
The Supreme Court found the defense raised by the accused to be a “frivolous and feeble attempt” unsupported by documentary evidence. The Court observed that the accused produced no proof of borrowing or repaying Rs 40,000 to PW-2, nor did he take legal steps to recover the alleged misplaced cheques prior to issuing a legal notice on September 16, 2014. Since this notice was issued long after the criminal complaint was filed and after the examination of PW-1 was complete, the Court classified it as an “ex post facto creation of evidence, an afterthought and an attempt to create documentary evidence to create artificial defence.”
Regarding financial capacity, Justice Nagarathna noted that the complainant’s testimony revealed regular investments in chit funds up to Rs 2,00,000 and that he had raised credit support from relatives and friends (PW-2 and PW-3) to lend the money. Furthermore, the Court emphasized that if the accused wished to challenge financial capacity, he ought to have specifically pleaded it in response to the statutory demand notice. The failure to reply to the demand notice raised an inference favoring the complainant’s version.
Addressing the limits of revisional powers under Section 397 CrPC, the Court cited State of Maharashtra v. Jagmohan Singh Kuldip Singh Anand and State of Kerala v. Puttumana Illath Jathavedan Namboodiri, reiterating that a revisional court does not act as an appellate court and cannot re-appreciate evidence to replace findings of lower courts merely because an alternative view is possible.
Quoting State of Kerala v. Puttumana Illath Jathavedan Namboodiri, the Court observed:
“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.”
The Court also relied on Sanjabij Tari v. Kishore S. Borcar and Southern Sales & Services v. Sauermilch Design and Handels GMBH, observing:
“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.”
The bench noted that the High Court failed to show any perversity or glaring error on the face of the record, making its interference with the lower courts’ findings legally unsustainable.
Decision
The Supreme Court allowed the appeal, set aside the judgment of the Karnataka High Court, and restored the judgments and orders of conviction and sentence passed by the trial court and the Sessions Court.
“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.”
Case Title: Kuntegowda v. Thurubaiah
Case No.: Criminal Appeal No. _____ of 2026 (Arising out of Special Leave Petition (Criminal) No. 2247 of 2024)
Bench: Justice B.V. Nagarathna, Justice Ujjal Bhuyan
Date: August 04, 2026
