Revisional courts cannot overturn concurrent Section 138 convictions absent perversity or glaring legal error.

The complainant advanced a hand loan of ₹4,50,000 to the accused in December 2010 for purchasing a house site, allegedly repayable within one year with 16% annual interest.

The accused subsequently issued Cheque No. 524714 dated 20 March 2013 for ₹4,50,000, which was dishonoured for insufficiency of funds on 22 March 2013.

The complainant issued a statutory demand notice on 28 March 2013, but the accused failed to pay, leading to the filing of a complaint under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”).

The trial court convicted the accused and imposed a fine of ₹9,00,000; the appellate court affirmed the conviction but reduced the fine to ₹6,50,000.

In revision, the Karnataka High Court acquitted the accused, principally holding that the complainant had failed to establish his financial capacity and the source and precise date of the loan.

The complainant appealed to the Supreme Court, challenging the High Court’s interference with the concurrent findings of conviction.

Whether the accused rebutted the statutory presumptions under Sections 118 and 139 of the NI Act after admitting his signature on the cheque?

Whether the complainant’s alleged financial incapacity, failure to disclose the precise source and date of the loan, and absence of contemporaneous documentation were sufficient to rebut the statutory presumptions?

Whether the High Court exceeded the permissible limits of revisional jurisdiction by reappreciating evidence and reversing concurrent findings of conviction?

Section 138 of the NI Act criminalises dishonour of a cheque issued towards discharge, wholly or partly, of a legally enforceable debt or liability, subject to fulfilment of the statutory requirements relating to presentation, demand notice and non-payment.

Sections 118(a) and 139 create rebuttable statutory presumptions that a negotiable instrument was issued for consideration and that the holder received the cheque towards discharge of a debt or liability; once execution or signature is admitted or proved, the evidentiary burden shifts to the accused.

Relying on Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745, and Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513, the Court held that a mere denial is insufficient and the accused must establish a probable defence capable of rebutting the presumptions.

The Court further applied the limited scope of revisional jurisdiction under Section 397 CrPC, now corresponding to Section 438 of the Bharatiya Nagarik Suraksha Sanhita, 2023: a revisional court should not function as a second appellate court or reappreciate evidence absent perversity, gross illegality, arbitrariness, or miscarriage of justice.

This principle was supported by State of Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2 SCC 452, State of Maharashtra v. Jagmohan Singh Kuldip Singh Anand, (2004) 7 SCC 659, and Sanjabij Tari v. Kishore S. Borcar, 2025 INSC 1158.

The accused admitted his signature on the cheque; consequently, the presumptions under Sections 118 and 139 of the NI Act arose in favour of the complainant.

The complainant established presentation of the cheque, its dishonour for insufficient funds, issuance of the demand notice within the prescribed period, non-payment, and timely filing of the complaint.

The accused’s defence—that the cheque had been given blank as security for a separate ₹40,000 loan allegedly taken from PW-2 and had been misused—was unsupported by receipts, proof of repayment, or any prompt legal action for recovery of the cheque.

The legal notice issued by the accused in 2014, after institution of the complaint and completion of the complainant’s evidence, was treated as an afterthought.

The Court also rejected the financial-capacity defence.

The complainant’s evidence showed that he had mobilised funds through PW-2 and PW-3 and had independently invested in other ventures, while their testimony corroborated his account and remained substantially unshaken in cross-examination.

The absence of a specific date of advancement or detailed source of funds did not, by itself, displace the statutory presumptions once the cheque’s execution and the statutory ingredients of Section 138 were established.

The High Court therefore erred by undertaking an elaborate reappreciation of the evidence and substituting its own view for the concurrent findings of the trial and appellate courts without identifying perversity or any glaring defect.

It further held that the High Court improperly exercised revisional jurisdiction by reassessing evidence and overturning concurrent findings of conviction in the absence of perversity or miscarriage of justice.

The appeal was allowed; the High Court’s acquittal order dated 6 October 2023 was set aside, and the judgments and orders of the trial court and Sessions Court, including the conviction and modified fine of ₹6,50,000, were restored.