Section 138 conviction upheld, but appellate interest reduced to 7.5% of the cheque amount.

The complainant alleged that the accused borrowed ₹9,00,000 on 1 December 2017 and issued a cheque for that amount, which was dishonoured for insufficient funds.

After service of a demand notice and non-payment, the complainant filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 (NI Act).

The trial court convicted the accused and imposed a fine of ₹12,05,000, directing ₹12,00,000 to be paid as compensation.

The appellate court affirmed the conviction and added interest at 9% per annum on the compensation amount.

The accused’s defence was that the cheque had been issued to the complainant’s sister in connection with an immovable-property transaction, not for a loan from the complainant.

He challenged the concurrent decisions in revision, also disputing the monetary order.

Sections 138, 118 and 139 of the NI Act govern cheque dishonour and the rebuttable presumptions that a cheque was issued for consideration and in discharge of a legally enforceable debt or liability.

Once execution and the relevant foundational facts are established, the accused may rebut those presumptions on a preponderance of probabilities, including through cross-examination or defence evidence.

Under Sections 397 and 401 of the Code of Criminal Procedure, 1973, revisional jurisdiction is supervisory, not a second appeal; intervention is warranted where the lower court’s finding is perverse, grossly erroneous, unreasonable, untenable, based on irrelevant or no material, or reflects arbitrary or capricious exercise of discretion.

The Court relied on Kuntegowda v. Thurubaiah and the principles in State of Kerala v. Puttumana Illath Jathavedan Namboodiri and State of Maharashtra v. Jagmohan Singh Kuldip Singh Anand on the limits of revision.

It also considered the compounding-cost guidelines in Sanjabit Tari v. Kishore S. Borcar & Anr., which prescribe different costs depending on the stage at which the cheque amount is paid.

The accused admitted his signature on the cheque and that it was drawn on his bank account, thereby attracting the presumptions under Sections 118 and 139.

Although he asserted that the cheque had been given to the complainant’s sister for a property transaction, he gave no consistent account of how it came into her possession, took no action against her, and did not elicit material in cross-examination to discredit the complainant’s account of the loan.

The Court therefore found no basis to disturb the concurrent finding of guilt in revision.

On the monetary order, the accused had expressed willingness to pay but had not paid the cheque amount, apart from depositing 50% when seeking suspension of sentence.

The Court nevertheless considered 7.5% interest on the cheque amount appropriate, rather than the 9% imposed by the appellate court.

The conviction under Section 138 of the NI Act and the trial court’s fine of ₹12,05,000 were confirmed.

The appellate court’s 9% interest direction was modified to 7.5% on ₹9,00,000, rather than on ₹12,00,000; the accused was directed to make the payment within two months before the trial court.

The remaining orders were left undisturbed.