High Court Cannot Re-Appreciate Evidence in Revision to Overturn Concurrent Cheque-Bounce Convictions

A Division Bench of the Supreme Court restored concurrent Section 138 NI Act convictions, holding the Karnataka High Court exceeded its revisional jurisdiction by re-examining evidence de novo to acquit the accused.

The Supreme Court has set aside an acquittal granted by the Karnataka High Court in a cheque-dishonour case under Section 138 of the Negotiable Instruments Act, 1881, ruling that a revisional court has no business substituting its own appreciation of evidence for that of two courts which have already returned concurrent findings of guilt. The bench of Justice B.V. Nagarathna and Justice Ujjal Bhuyan restored the conviction and sentence awarded by the trial court and confirmed by the Sessions Court, finding that the High Court had acted as if it were a court of first appeal rather than a court of limited revisional supervision. The judgment, reported as 2026 INSC 790, also restates the conditions under which the statutory presumptions under Sections 118 and 139 of the NI Act arise and how an accused must go about rebutting them.

How the Dispute Reached the Supreme Court

The complainant, Kuntegowda, advanced a hand loan of Rs. 4,50,000 to the accused, Thurubaiah, in December 2010 for the purchase of a house site, on terms that the amount would be repaid within one year with interest at 16 per cent per annum. The accused issued cheque No. 524714 dated 20 March 2013, drawn on ICICI Bank, Malleshwaram Branch, Bengaluru, for that sum. When the complainant presented it at State Bank of India, Magadi Road Branch, it was returned on 22 March 2013 with the endorsement “funds insufficient.”

A statutory demand notice was sent to the accused on 28 March 2013. No payment followed. The complainant filed Complaint Case No. 12108 of 2013 before the XII Additional Chief Metropolitan Magistrate, Bengaluru, on 6 May 2013 under Section 138 of the NI Act.

On 1 September 2015, the trial court convicted the accused and sentenced him to pay a fine of Rs. 9,00,000, with six months' simple imprisonment in default. The trial court held that the accused's signature on the cheque was admitted, that the legal notice — though not received personally — was properly addressed and deemed served, and that the statutory requirements under Sections 138 to 142 had been met, triggering the presumptions under Sections 118 and 139 which the defence had failed to rebut.

The Sessions Court dismissed the accused's appeal on 19 September 2016, affirming the conviction but reducing the fine to Rs. 6,50,000. The accused then filed Criminal Revision Petition No. 1502 of 2016 before the Karnataka High Court.

On 6 October 2023, the High Court allowed the revision petition, set aside the concurrent convictions, and acquitted the accused. The High Court's principal reasoning was that the complainant had not disclosed from which relatives he had borrowed money to fund the loan, had not explained why he lent money without charging interest, had provided no date for the advancement of the loan, and had a monthly income of only Rs. 20,000 to Rs. 25,000, making it highly improbable that he could lend Rs. 4,50,000. The complainant then approached the Supreme Court by special leave.

What the Court Held on the Section 138 Ingredients

The Supreme Court first confirmed that all the statutory prerequisites under Section 138 were satisfied on the facts. The cheque was presented within six months of its date. The return memo established dishonour due to insufficient funds. A demand notice was issued within thirty days of receiving information from the bank, and the accused failed to pay within fifteen days of receipt. The complaint was filed on 6 May 2013, within the limitation period. With those boxes ticked, the Court held, the presumptions under Sections 118 and 139 stood invoked and the onus passed to the accused to rebut them.

The accused had offered two lines of defence: first, that the cheque had been issued in blank as security for a Rs. 40,000 loan from one S.B. Ramachandraiah (PW-2) and was later misappropriated; second, that the complainant lacked the financial capacity to advance Rs. 4,50,000.

On the first line of defence, the Court found the accused had led no documentary evidence showing that any Rs. 40,000 loan had been extended to him by PW-2, no receipt establishing repayment, and no evidence of any legal step taken to recover the blank cheques before the complaint was filed. The legal notice demanding return of the cheques was dated 16 September 2014, more than a year after the complaint was filed on 6 May 2013, and after PW-1's examination-in-chief was already complete. The Court characterised this as an afterthought amounting to ex post facto creation of documentary evidence.

PW-2 categorically denied involvement in any Rs. 40,000 loan to the accused. PW-2 and PW-3 both gave consistent testimony that the complainant had borrowed Rs. 1,00,000 from PW-2 and Rs. 50,000 from PW-3 in December 2010 specifically to fund the hand loan to the accused. Cross-examination of neither witness dislodged these accounts.

On the financial capacity point, the Court noted that the complainant's own examination-in-chief disclosed routine investments in chit funds of up to Rs. 2,00,000, which established financial capacity beyond his monthly salary figures. The cash credit from PW-2 and PW-3 provided the balance. The Court held that the burden of demonstrating the complainant's financial incapacity rested on the accused, who had to plead it specifically, including in the reply to the demand notice, and then lead independent evidence. No such evidence had been placed on record.

The Statutory Presumptions and How They Operate

The Court set out the interplay between Sections 118 and 139 of the NI Act at length. Section 118(a) raises a presumption of consideration for every negotiable instrument once its execution is proved or admitted. Section 139 raises a mandatory — not discretionary — presumption that the holder received the cheque for discharge of a debt or liability. Both are rebuttable, but a bare denial is not enough.

Relying on Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513, the Court reiterated that once the complainant discharges the burden of proving execution of the instrument, the presumptions shift the burden to the accused. The accused must bring on record facts and circumstances upon which a court may conclude either that the debt did not exist or that its non-existence is so probable that a prudent person would act on that footing.

In the present case, the accused's admission that the signature on the cheque was his was dispositive. Once that admission was made, the Court held, the accused was presumed to have known the contents of the cheque and to have issued it for discharge of a liability. His defence of blank cheque misuse therefore had to be supported by cogent material evidence — which it was not.

The Limits of Revisional Jurisdiction

The Court devoted considerable attention to the error of law committed by the High Court in the exercise of its revisional powers under Section 397 of the Code of Criminal Procedure, 1973 (now Section 438 of the Bharatiya Nagarik Suraksha Sanhita, 2023).

A revisional court, the Court explained, does not act as an appellate court. Its role is supervisory: to satisfy itself about the correctness, legality, and propriety of the finding, sentence, or order of the inferior court. It should not dwell upon facts and evidence in the manner of an appellate court. Findings of two courts below should not be reversed merely because an alternative view is possible.

The Court quoted from State of Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2 SCC 452: “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.”

The Court also drew on Sanjabij Tari v. Kishore S. Borcar, 2025 INSC 1158, where a similar reversal of concurrent Section 138 NI Act convictions by a High Court in revision had been set aside. That decision had held that in the absence of perversity in the concurrent findings, it is not open to a revisional court to re-analyse and re-interpret the evidence.

The Court set out three conditions under which a revisional court may interfere: the order is perverse, grossly erroneous, glaringly unreasonable, or wholly untenable in law; the lower court considered immaterial or irrelevant material, or no material at all; or relevant material was not considered, or judicial discretion was exercised arbitrarily or capriciously. None of those conditions was present here.

The High Court had gone into the details of each testimony and document and had essentially re-tried the matter. The Court found that the High Court had failed to identify any glaring contradiction or perversity on the face of the record that could have justified invoking revisional jurisdiction to upset two concurrent convictions.

Order

The Supreme Court allowed the criminal appeal, set aside the High Court's order dated 6 October 2023, and restored the judgments and orders of the trial court and the Sessions Court, along with the sentence. The accused stands convicted under Section 138 of the NI Act with the fine of Rs. 6,50,000 as modified by the Sessions Court.