The accused never said he was prejudiced, so the cheque case should not have gone back for fresh trial

A ground raised for the first time in revision, on a precedent about how defence evidence is taken, sent a completed Section 138 trial back to the defence-evidence stage. The Supreme Court calls it the ingenuity of the lawyer.

A complainant who has won a cheque dishonour case and then watched the whole defence stage reopened on a point nobody raised at trial has a narrow but real grievance. On 22 September 2026, in Sanu Varghese v. Shoukkathali, a Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran upheld it and set the remand aside.

What the High Court did

The appellant was the complainant and the respondent the accused in a proceeding under Section 138 of the Negotiable Instruments Act, 1881. The High Court, in revision, remanded the matter for fresh trial from the stage of defence evidence, relying on this Court's decision in M/s Mandvi Cooperative Bank Limited v. Nimesh B. Thakore (2010) 3 SCC 83.

The question the Supreme Court framed was narrow: whether that remand was proper on a ground raised at the stage of revision, when the accused had taken no plea of prejudice.

The distinction matters because a remand of this kind is not a small thing. It does not merely correct a procedural step; it reopens the defence case in a complaint that has already run to judgment, and in Section 138 matters — where the complainant is usually the one waiting on money — the delay is itself the remedy the accused gets.

What Mandvi actually decided

The judgment restates the precedent before applying it. Mandvi considered Section 145 of the NI Act in detail. Sub-section (1) allows the complainant's evidence to be given on affidavit, to be read in evidence in any enquiry, trial or other proceeding under the Code, subject to all just exceptions — a provision that enables only the complainant's chief examination to be on affidavit. Sub-section (2) confers a discretion on the court to call a person giving evidence to do so on affidavit and to examine him on the facts contained in it; but if either the prosecution or the accused applies that the deponent be called in person and examined again, that must be done.

Mandvi also drew a distinction, at paragraph 48, between the nature of the complainant's evidence and that of the accused in a dishonoured cheque case. Defence evidence is not necessarily documentary, and the defence would adduce other kinds of evidence to rebut the presumption that the cheque was issued in discharge of a debt or liability — which is why the accused cannot be permitted to be examined on affidavit.

That dictum, the Bench holds, has to be applied in a criminal case specifically with reference to the prejudice caused to the accused in a completed trial.

The defence that was actually run

The Court went to the Magistrate's order to see what the accused had in fact done, and the record shows a defence fully put.

Examined as DW-1, the accused contended that he had given a signed blank cheque leaf as security for a loan of Rs 10 lakh transferred by the complainant to his account. The cheque presented was for Rs 30 lakh. He further contended that on the date the further Rs 20 lakh was said to have been handed over, and on the date the cheque was issued, the complainant was not in station but at Bengaluru — the complainant's own evidence as PW-1 having been corroborated by PW-2.

That is a complete defence on the pleadings: the cheque was security, the sum was inflated threefold, and the complainant was elsewhere on the material dates. It was advanced, and it failed on the evidence.

No substantive evidence of the complainant’s unavailability was produced. The Magistrate observed that the accused could readily have obtained the call data records of the complainant's mobile to establish his absence, and did not.

The accused never alleged prejudice before the trial court. The signature was admitted, the presumption applied squarely, and it had not been rebutted.

Ingenuity, and an absent plea

Before the High Court, the judgment records, the accused had merely by the ingenuity of his lawyer taken a contention which the Single Judge erroneously accepted. The plea of prejudice, the Bench observes, looms large in the case by its absence.

Senior counsel for the respondent pointed out that the trial had in fact been resumed at the defence evidence stage and completed. The Court held that of no consequence, given that it was setting aside the Single Judge's order — which it did.

What happens now

The criminal revision petition of 2023 is restored to the file of the High Court, to be considered on its own merits. The Court noted, as the respondent's senior counsel had pointed out, that the other contentions remain available to him there.

The practical reading is about where a procedural objection must be taken. A point of this kind, going to the manner in which defence evidence was recorded, is one the accused must raise at the trial, and must show worked some actual prejudice. Raised first in revision, after a completed trial, against an admitted signature and an unrebutted presumption, it will not support an order sending the case back to start the defence again.