THE LIMITS OF REVISIONAL JURISDICTION IN CHEQUE DISHONOUR CASES

INTRODUCTION
In Kuntegowda v. Thurubaiah (decided on 04 August 2026), the Supreme Court of India, speaking through Justices B.V. Nagarathna and Ujjal Bhuyan, reinforced two important legal principles. First, once the execution of a cheque is admitted, the law raises a statutory presumption that it was issued in discharge of a legally enforceable debt. Secondly, a revisional court cannot act as if it were hearing a regular appeal by reassessing evidence unless there is patent illegality or perversity in the findings of the subordinate courts. The Judgment therefore strengthens the legislative objective of ensuring credibility and trust in commercial transactions involving Cheques.

BRIEF FACTS
The dispute arose from a friendly loan of Rs. 4,50,000/- allegedly advanced by the Complainant to the Accused in December 2010 for the purchase of a house site. To discharge the said liability, the Accused issued a cheque dated 20 March 2013. When presented for encashment, the cheque was dishonoured with the endorsement “Funds Insufficient.” After the statutory Demand Notice failed to secure payment, the Complainant initiated proceedings under Section 138 (Dishonour of cheque for insufficiently, etc., of funds in the account) of the Negotiable Instruments Act.
The Trial Court convicted the Accused after holding that all the statutory requirements under Sections 138 to 142 (Cognizance of Offence) of the Negotiable Instruments Act, 1881 had been duly complied with and that the Accused had failed to rebut the statutory presumptions under Sections 118 (Presumption as to negotiable instruments) and 139 (Presumption in favour of holder) of the Act. The Trial Court sentenced the Accused to pay a fine of Rs.9,00,000/-, with a default sentence of six months’ simple imprisonment. On Appeal, the Appellant Court upheld the conviction but reduced the fine from Rs.9,00,000/- to Rs.6,50,000/-, while maintaining the finding of guilt.
However, the Karnataka High Court, exercising its revisional jurisdiction, acquitted the Accused. It reasoned that the Complainant had failed to satisfactorily establish his financial capacity to advance such a substantial loan and considered the transaction inherently improbable. Aggrieved thereby, the Complainant approached the Supreme Court challenging the Order of acquittal.

ISSUES OF LAW
1.Whether admission of the signature on the cheque automatically attracts the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act.
2.Whether the Accused had successfully rebutted those statutory presumptions through credible evidence.
3.Whether the Complainant was required, in the first instance, to independently establish his financial capacity to lend the disputed amount.
4.Whether the High Court exceeded the permissible limits of its revisional jurisdiction by reassessing evidence and reversing concurrent findings of fact.

ANALYSIS OF THE JUDGMENT
The Supreme Court reaffirmed that once the Accused admits signing the cheque, the presumptions under Sections 118 and 139 of the Negotiable Instruments Act automatically come into operation. The burden then shifts to the Accused to prove that the cheque was not issued towards a legally enforceable debt. Mere denial or unsupported allegations are insufficient to rebut these statutory presumptions.
The Accused claimed that the Cheque had been issued as security for a different loan and was later misused. However, the Court found no documentary or reliable evidence to support this claim. It also observed that the Legal Notice demanding the return of the Cheque was sent only after the criminal proceedings had commenced, making the defense appear to be an afterthought. Consequently, the Accused failed to rebut the statutory presumption.
The High Court had questioned the Complainant’s financial ability to lend Rs. 4,50,000/-. The Supreme Court disagreed, noting that the Complainant had explained the source of the funds and that his witnesses had corroborated his version. The Court clarified that the Complainant is not required to prove his financial capacity in every case unless the Accused first raises a credible challenge supported by evidence.
The Supreme Court held that the High Court exceeded its revisional jurisdiction by reappreciating the evidence and overturning concurrent findings of the Trial and Appellate Courts. Revisional powers are supervisory in nature and cannot be exercised as though the High Court were hearing a regular appeal. Unless there is a clear legal error or perversity, concurrent findings should not be disturbed.

CONCLUSION
The Supreme Court carefully balanced the statutory rights of the Complainant with the Accused’s opportunity to rebut the presumptions created by law. It made it clear that while these presumptions are rebuttable, they cannot be displaced through mere assertions, improbable stories or afterthoughts unsupported by evidence.
Equally important is the Court’s reminder that revisional jurisdiction is supervisory in nature and should not become a platform for re-evaluating evidence already appreciated by two competent courts. By restoring the conviction, the Supreme Court strengthened both the evidentiary framework of the Negotiable Instruments Act and the certainty essential for commercial transactions.

TRISHMA KASHYAP
Legal Associate
The Indian Lawyer & Allied Service

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