Kuntegowdav.Thurubaiah

Supreme Court Restores NI Act Conviction, Warns High Courts Against Exceeding Revisional Jurisdiction

Case Snapshot

Case Name: Kuntegowda v. Thurubaiah

Citation: 2026 INSC 790

Bench: Justice B.V. Nagarathna and Justice Ujjal Bhuyan

Date of Judgment: August 4, 2026

Area of Law: Negotiable Instruments Act, Criminal Revision, Presumptions

The Judgment in One Line

High Court erred in revisional jurisdiction by re-appreciating evidence and substituting its own findings for concurrent convictions under Section 138 NI Act.

Why This Judgment Matters

This judgment is a significant reminder of the limited scope of revisional jurisdiction under Section 397 CrPC (now Section 438 BNSS). The Supreme Court restored concurrent convictions under Section 138 of the NI Act, holding that the High Court exceeded its revisional powers by re-appreciating evidence and substituting its own conclusions. The judgment reinforces that once the statutory presumptions under Sections 118 and 139 of the NI Act are triggered, the accused bears a heavy burden to rebut them with cogent evidence. A bare denial or claim of financial incapacity of the complainant is insufficient to dislodge the presumptions. The judgment also clarifies that revisional courts cannot act as appellate courts.

Background

The complainant extended a hand loan of ₹4,50,000 to the accused in December 2010 for purchasing a house site. The accused issued a cheque dated March 20, 2013, which was dishonoured due to insufficient funds. After issuing a legal notice and receiving no payment, the complainant filed a complaint under Section 138 of the NI Act.

The Trial Court convicted the accused, sentencing him to pay a fine of ₹9,00,000. The Appellate Court affirmed the conviction but reduced the fine to ₹6,50,000. The High Court, in its revisional jurisdiction, set aside the concurrent convictions, holding that the complainant lacked financial capacity to lend the amount and failed to disclose the exact timeline of the transaction. Aggrieved, the complainant appealed to the Supreme Court.

Issues Before the Court

1. Whether the High Court correctly exercised its revisional jurisdiction in setting aside concurrent findings of conviction.

2. Whether the accused successfully rebutted the statutory presumptions under Sections 118 and 139 of the NI Act.

3. Whether the complainant's financial capacity is a relevant factor in rebutting the presumption under Section 139.

What Did the Supreme Court Hold?

The Supreme Court allowed the appeal and restored the conviction. The Court's reasoning was anchored in the statutory framework and settled principles:

Statutory Presumptions Triggered: Once the accused admitted his signature on the cheque, the presumptions under Sections 118 and 139 of the NI Act were triggered. The Court must presume that the cheque was issued for consideration and for the discharge of a debt or liability. The burden shifts to the accused to rebut these presumptions.

Accused Failed to Rebut Presumptions: The accused claimed that the cheque was a blank cheque given as security to one S.B. Ramachandraiah for a loan of ₹40,000 and was misused. However, the accused produced no documentary evidence to support this claim. The legal notice sent by the accused on September 16, 2014—after the complaint was filed on May 6, 2013—was an ex post facto creation and carried no evidentiary value.

Financial Capacity Argument Rejected: The High Court acquitted the accused based on the complainant's monthly income of ₹20,000-25,000, concluding he could not have lent ₹4,50,000. The Supreme Court rejected this reasoning. The complainant had borrowed ₹1,00,000 from PW-2 and ₹50,000 from PW-3 to facilitate the loan. Their testimonies were corroborative and withstood cross-examination. The accused failed to discharge the burden of proving the complainant's lack of financial capacity.

Revisional Jurisdiction Exceeded: The Supreme Court held that the High Court acted as an appellate court, not a revisional court. Revisional jurisdiction is supervisory, not appellate. It can be exercised only where the order is perverse, grossly erroneous, or based on no material. The High Court failed to identify any perversity in the concurrent findings and instead substituted its own view on the evidence.

Concurrent Findings Should Not Be Disturbed: The Court reiterated that concurrent findings of fact by the Trial Court and Appellate Court should not be disturbed in revision unless there is a glaring contradiction or miscarriage of justice. No such ground existed here.

Key Legal Principles

1. Presumptions under Sections 118 and 139 are statutory and mandatory — once execution of the cheque is admitted or proved, the court must presume consideration and discharge of debt.

2. Burden shifts to the accused — the accused must rebut the presumptions with cogent evidence; a bare denial is insufficient.

3. Revisional jurisdiction is supervisory, not appellate — courts cannot re-appreciate evidence and substitute their own findings in the absence of perversity.

4. Financial capacity of the complainant is a relevant but not decisive factor — it must be specifically pleaded and proved by the accused; it cannot be raised for the first time in revision.

5. Concurrent findings should not be disturbed in revision — interference is warranted only where the order is perverse, grossly erroneous, or based on no material.

6. Legal notice sent after filing of complaint is ex post facto — it cannot be used to create an artificial defence.

7. Failure to respond to statutory notice raises an adverse inference — the accused's silence indicates the complainant's version carries merit.

Important Precedents

Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745

• Laid down the essential ingredients for an offence under Section 138 of the NI Act.

Kumar Exports v. Sharma Carpets, (2009) 2 SCC 513

• Held that presumptions under Sections 118 and 139 shift the burden on the accused; the accused must prove the contrary by cogent evidence.

State of Maharashtra v. Jagmohan Singh Kuldip Singh Anand, (2004) 7 SCC 659

• Held that in revisional jurisdiction, the High Court cannot embark upon an in-depth roving re-examination of evidence and come to a contrary conclusion.

State of Kerala v. Puttumana Illath Jathavedan Namboodiri, (1999) 2 SCC 452

• Held that revisional power cannot be equated with appellate power; reappreciation of evidence is not permissible unless there is glaring perversity.

Sanjabij Tari v. Kishore S. Borcar, 2025 INSC 1158

• Held that in the absence of perversity, it is not open to the High Court in revisional jurisdiction to upset concurrent findings.

Practical Impact

For advocates: This judgment is a powerful tool for defending convictions under Section 138 NI Act. It reinforces that concurrent findings should not be lightly disturbed in revision. Advocates for complainants can argue that the High Court exceeded its revisional jurisdiction by re-appreciating evidence. Advocates for accused must ensure that any defence—particularly financial incapacity of the complainant—is specifically pleaded and supported by cogent evidence, not raised for the first time in revision.

For future litigation: High Courts will now be more circumspect in exercising revisional jurisdiction in NI Act cases. The judgment clarifies that financial capacity alone is insufficient to rebut statutory presumptions unless supported by evidence. It also reinforces that revisional courts cannot act as appellate courts.

May be cited: In any NI Act case where the High Court has interfered with concurrent findings in revision, and in cases where the accused seeks to rely on the complainant's financial capacity as a defence.

Lawcurb Quick Insight

The accused's legal notice dated September 16, 2014—sent after the complaint was filed on May 6, 2013—was rightly treated as an afterthought. Courts must be wary of such ex post facto creations of evidence designed to manufacture a defence after proceedings have commenced.

Lawcurb Practice Note

When defending an NI Act case, ensure that any defence—including financial incapacity of the complainant—is specifically pleaded in response to the statutory notice and supported by evidence. Raising it for the first time in revision is impermissible.

Remember This Ratio

Revisional courts cannot re-appreciate evidence and substitute their own findings in the absence of perversity; statutory presumptions under NI Act are mandatory.

Exam Lens

Q: What is the scope of revisional jurisdiction under Section 397 CrPC (Section 438 BNSS) in NI Act cases? A: Revisional jurisdiction is supervisory, not appellate. The court can interfere only where the order is perverse, grossly erroneous, based on no material, or where there is a miscarriage of justice. It cannot re-appreciate evidence and substitute its own findings.

Q: How can the accused rebut the presumption under Section 139 of the NI Act? A: The accused must lead cogent evidence—direct or indirect—to show that the non-existence of debt or consideration is so probable that a prudent man would act upon it. A bare denial is insufficient. The evidence must be specifically pleaded and proved.

Q: What is the evidentiary value of a legal notice sent by the accused after the complaint is filed? A: It carries little to no evidentiary value. It appears to be an ex post facto creation of evidence, an afterthought designed to manufacture a defence after proceedings have commenced.

Final Outcome

• Appeal allowed — the Supreme Court set aside the High Court's order of acquittal.

• Conviction restored — the Trial Court's conviction and the Appellate Court's affirmation are restored.

• Revisional jurisdiction exceeded — the High Court erred in re-appreciating evidence and substituting its own findings.

• Presumptions upheld — the accused failed to rebut the statutory presumptions under Sections 118 and 139.

• Fine modified — the Appellate Court's reduction of fine to ₹6,50,000 is upheld.

Lawcurb Verdict

This judgment is a robust reaffirmation of the limited scope of revisional jurisdiction and the mandatory nature of statutory presumptions under the NI Act. By restoring the conviction, the Court has protected the credibility of negotiable instruments and ensured that concurrent findings of fact are not lightly disturbed. The judgment serves as a warning to High Courts against exceeding their revisional powers and acting as appellate courts in NI Act cases. A timely reminder of the boundaries of judicial review.

This report is prepared by Lawcurb for educational and informational purposes only. It is a concise summary of the judgment and should not be construed as legal advice. Readers are encouraged to refer to the original judgment before relying on any legal proposition.