₹2,000 Notes Weren’t In Circulation In October 2016, But That Alone Didn’t Rebut Cheque-Bounce Presumption: Karnataka HC

The complainant alleged that he lent the accused ₹2,50,000 in cash on 10 October 2016 and that the accused issued a cheque for repayment. The cheque was dishonoured for insufficiency of funds; the complainant issued a demand notice, which was served, but the accused did not pay or reply.

The trial court convicted the accused under Section 138 of the Negotiable Instruments Act, 1881, and imposed a fine of ₹3,50,000; the appellate court confirmed the conviction and sentence.

In revision, the accused challenged the concurrent findings, principally arguing that the complainant had not established financial capacity or the alleged loan.

Section 138 of the Negotiable Instruments Act applies where a cheque is issued towards a legally enforceable debt or liability, dishonoured, followed by a timely written demand notice, and the drawer fails to pay within the prescribed period.

Sections 118 and 139 raise rebuttable presumptions that the cheque was issued for consideration and towards discharge of a legally recoverable debt.

The High Court’s revisional jurisdiction under Sections 397 and 401 Cr.P.C. is supervisory, not equivalent to appellate jurisdiction; interference with concurrent findings is warranted where they are perverse, grossly erroneous, unreasonable, untenable, based on irrelevant or no material, or reflect arbitrary or capricious exercise of discretion.

The Court relied on Kuntegowda v. Thurubaiah, Criminal Appeal No. 3654 of 2026, 2026 SCC OnLine SC 1485, and the principles stated in State of Maharashtra v. Jagmohan Singh Kuldip Singh Anand, (2004) 7 SCC 659, and State of Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2 SCC 452.

The Court found that the cheque was dishonoured, the demand notice was served at the accused’s address, and the accused did not reply.

The accused’s evidence concerning an alleged security cheque given to Devaraju was inconsistent and did not establish that defence; the Court also noted that the accused later relied on a stop-payment instruction.

The challenge to the complainant’s capacity and the alleged cash denominations did not, in the Court’s view, rebut the statutory presumptions.

The complainant testified to income from agriculture and livestock, and the accused had not elicited evidence in cross-examination sufficient to discredit that account; nor had the accused raised the financial-capacity defence in his own evidence.

Finding no material showing that the lower courts had ignored relevant evidence or relied on irrelevant material, the High Court held that the threshold for revisional interference was not met.

The trial court’s conviction and sentence, as confirmed by the appellate court, were left undisturbed.