Admitted Cheque Signature Triggers Mandatory NI Act Presumptions; Revisional Courts Cannot Reappreciate Concurrent Convictions Absent Perversity
1. Introduction
In KUNTEGOWDA v. THURUBAIAH, 2026 INSC 790, the Supreme Court of India considered an appeal by the complainant against the Karnataka High Court’s order acquitting the accused in a prosecution under Section 138 of the Negotiable Instruments Act, 1881.
The complainant alleged that he had advanced a hand loan of Rs.4,50,000 to the accused for purchase of a house site. The accused issued a cheque for the said amount, which was dishonoured for insufficiency of funds. The trial court convicted the accused, and the appellate court affirmed the conviction while reducing the fine. However, the High Court, in revision, acquitted the accused mainly on the ground that the complainant had not proved sufficient financial capacity to advance such a loan.
The key issues before the Supreme Court were:
- whether admission of signature on the cheque attracted presumptions under Sections 118 and 139 of the NI Act;
- whether the accused had rebutted those presumptions by questioning the complainant’s financial capacity;
- whether the High Court exceeded its revisional jurisdiction by reappreciating evidence and reversing concurrent convictions.
2. Summary of the Judgment
The Supreme Court allowed the complainant’s appeal, set aside the High Court’s acquittal, and restored the judgments of the trial court and Sessions Court convicting the accused under Section 138 of the NI Act.
The Court held that once the accused admitted his signature on the cheque, statutory presumptions under Sections 118 and 139 arose in favour of the complainant. These presumptions include that the cheque was issued for consideration and in discharge of a legally enforceable debt or liability.
The Court found that the accused failed to rebut the presumptions by cogent evidence. His defence that the cheque was a blank security cheque allegedly given to PW-2 for a Rs.40,000 loan was unsupported by documentary evidence. The accused’s later legal notice demanding return of blank cheques was treated as an afterthought because it was issued only after the complaint had already been filed and after evidence had commenced.
The Court also held that the High Court improperly acted as an appellate court while exercising revisional jurisdiction. In the absence of perversity, gross illegality, or glaring miscarriage of justice, the High Court could not reappreciate evidence and overturn concurrent findings of conviction.
3. Analysis
A. Precedents Cited
i. Dalmia Cement (Bharat) Ltd. v. Galaxy Traders & Agencies Ltd., (2001) 6 SCC 463
This precedent was cited to explain the object of Chapter XVII of the NI Act, which contains Sections 138 to 148. The Supreme Court reiterated that these provisions were introduced to enhance faith in banking transactions and give credibility to cheques as instruments of commercial payment.
The case influenced the Court’s approach by emphasizing that Section 138 is not merely punitive; it serves a broader commercial purpose by discouraging dishonest drawers from issuing cheques without sufficient funds.
ii. Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745
This case was relied upon for identifying the essential ingredients of an offence under Section 138. The Court reiterated that the complainant must show:
- drawing of a cheque for discharge of debt or liability;
- presentation within its validity period;
- dishonour due to insufficiency of funds or exceeding arrangement;
- issuance of statutory demand notice within the prescribed period;
- failure of the drawer to pay within fifteen days.
Applying this precedent, the Supreme Court found that all statutory requirements were satisfied in the present case.
iii. Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513
This was a central precedent on the nature of presumptions under Sections 118 and 139 of the NI Act. The Court quoted the principle that once execution of the cheque is admitted or proved, the court must presume that it was issued for consideration and in discharge of debt or liability.
However, the presumption is rebuttable. The accused may rebut it by showing that the non-existence of debt or consideration is so probable that a prudent person would act on that basis. A mere denial is insufficient.
In the present case, the accused did not produce reliable evidence to show that the cheque was misused or that no debt existed. Therefore, the presumption remained unrebutted.
This authority was cited on the limits of revisional jurisdiction. It holds that the High Court, in revision, cannot conduct a roving re-examination of evidence and arrive at conclusions contrary to concurrent findings of lower courts.
The Supreme Court used this precedent to hold that the Karnataka High Court had exceeded its jurisdiction by reassessing the evidence as if it were hearing an appeal.
v. State of Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2 SCC 452
This case was cited for the principle that revisional jurisdiction is supervisory, not appellate. The High Court may interfere only to correct miscarriage of justice, illegality, impropriety, or perversity.
The Court held that the High Court should not reappreciate evidence where both the Magistrate and Sessions Court have already evaluated it, unless there is some glaring defect.
vi. Sanjabij Tari v. Kishore S. Borcar, 2025 INSC 1158
This recent precedent was directly relevant because it concerned reversal of concurrent findings of conviction under Section 138 of the NI Act. The Supreme Court reiterated that, absent perversity, a revisional court cannot upset concurrent factual findings.
The judgment also referred to Southern Sales & Services and Ors. v. Sauermilch Design and Handels GMBH, (2008) 14 SCC 457, which states that even if an order is wrong, a revisional court should not interfere unless there is jurisdictional error.
B. Legal Reasoning
i. Statutory presumptions under Sections 118 and 139
The Supreme Court emphasized that Section 139 creates a mandatory presumption in favour of the holder of the cheque. Once the accused admitted that the signature on the cheque was his, the Court was bound to presume that the cheque was issued for discharge of a debt or liability.
Section 118 further supports presumptions as to consideration, date, and holder-in-due-course status. These presumptions shift the evidentiary burden to the accused.
ii. Accused’s defence was not supported by cogent evidence
The accused claimed that he had borrowed only Rs.40,000 from PW-2 and had given blank cheques as security, which were later misused by the complainant. The Court rejected this defence because:
- there was no documentary proof of the alleged Rs.40,000 loan;
- there was no receipt or endorsement showing repayment;
- no timely legal action was taken to recover the alleged blank cheques;
- the accused’s legal notice demanding return of cheques was issued after the complaint had been filed and after evidence had begun.
The Court considered this legal notice to be an ex post facto attempt to create evidence.
iii. Financial capacity argument was insufficient
The High Court had acquitted the accused mainly because the complainant’s monthly income was only Rs.20,000 to Rs.25,000 and he had not fully explained how he mobilised Rs.4,50,000.
The Supreme Court disagreed. It noted that the complainant had explained that he obtained financial assistance from PW-2 and PW-3. Their testimonies supported his version and were not shaken in cross-examination. The complainant also had investment activities, including chit fund investments.
Importantly, the Court held that if the accused wished to challenge the complainant’s financial capacity, he had to raise a proper defence and support it by evidence. In the absence of such material, the statutory presumption could not be displaced.
iv. Revisional jurisdiction is limited
The Supreme Court strongly criticized the High Court for acting like an appellate court. In revision, the High Court may examine correctness, legality, or propriety, but it cannot substitute its own factual conclusions merely because another view is possible.
Interference is justified only where the lower court’s finding is perverse, grossly erroneous, glaringly unreasonable, based on irrelevant material, or ignores relevant material. None of these conditions existed here.
C. Impact of the Judgment
This judgment strengthens the evidentiary value of cheques in Section 138 prosecutions. It confirms that once the drawer admits the signature, the complainant is not required at the outset to independently prove the debt beyond the statutory presumption.
The ruling will likely discourage accused persons from relying on vague defences such as “blank cheque misuse” or “lack of financial capacity” without producing credible evidence. It also clarifies that post-complaint legal notices or belated claims may be treated as afterthoughts.
The decision is also significant for criminal revision practice. High Courts are reminded that revisional jurisdiction is supervisory and narrow. Concurrent findings of conviction, especially under Section 138 NI Act, cannot be casually overturned by reappreciating oral and documentary evidence.
4. Complex Concepts Simplified
Section 138 NI Act
This provision makes cheque dishonour an offence if the cheque was issued for a legally enforceable debt, was dishonoured, statutory notice was issued, and payment was not made within fifteen days.
Presumption under Section 139
Once the accused admits signing the cheque, the law presumes that it was issued to repay a debt or liability. The complainant gets the benefit of this presumption.
Rebuttable presumption
The accused can disprove the presumption, but must do so through credible evidence or circumstances. A bare denial is not enough.
Holder in due course
A person who lawfully holds a negotiable instrument, such as a cheque, for consideration and in good faith is treated as a holder in due course.
Revisional jurisdiction
Revision is not a second appeal. The High Court uses it to correct serious legal errors, perversity, or miscarriage of justice, not to reassess every piece of evidence.
5. Conclusion
The Supreme Court’s decision in KUNTEGOWDA v. THURUBAIAH reinforces two important principles: first, admission of signature on a dishonoured cheque activates strong statutory presumptions under the NI Act; second, revisional courts cannot overturn concurrent convictions by reappreciating evidence unless there is perversity or serious illegality.
The judgment is a significant reaffirmation of the credibility of cheque-based transactions and the limited nature of criminal revisional jurisdiction. It protects the efficacy of Section 138 proceedings while preserving the accused’s right to rebut presumptions through genuine and cogent evidence.