Once Signature On Cheque Is Admitted, It Means Accused Was Aware Of Its Contents Unless Proved Otherwise: Supreme Court
The Court held that the complainant's modest monthly income cannot by itself rebut statutory presumption under Section 139 once cheque signature is admitted.
Justice B.V. Nagarathna, Justice Ujjal Bhuyan, Supreme Court
The Supreme Court has held that once the signature on a cheque stands proved, the necessary corollary is that the accused was aware of its contents unless the contrary is proven, while setting aside a Karnataka High Court order that had acquitted a cheque-bounce accused in revisional jurisdiction. Restoring his conviction under Section 138 of the Negotiable Instruments Act, 1881, the Court held that the High Court had impermissibly conducted a fresh, appellate-style re-appreciation of evidence to reverse concurrent findings of guilt recorded by the trial court and the first appellate court.
Noting that the accused had failed to rebut the mandatory statutory presumption under Section 139 NI Act once his signature on the cheque stood admitted, the Court held that the High Court had erred in accepting the accused's argument that the complainant's modest monthly income of Rs. 20,000–25,000 made it improbable he could have advanced a hand loan of Rs. 4.5 lakh, particularly where the complainant had produced corroborating witnesses who testified to having extended him credit for that very purpose.
A Bench of Justice B.V. Nagarathna and Justice Ujjal Bhuyan observed, “…we would like to underline the admitted fact that the signature on the cheque is that of the accused. Apropos, once the signature on the cheque stands proved, the necessary corollary is that the accused was aware about the contents of the said cheque unless the contrary is proven which is not so in the present case”.
“…we find that the High Court has failed to highlight any reason or material satisfaction to the effect that there was any such glaring contradiction or perversity apparent on the face of the record so as to justify the exercise of the powers under revisional jurisdiction and thereby erred in interfering with the judgment and orders of the courts below. Therefore, the present appeal has to be allowed by setting aside the impugned order of the High Court. In view of the aforesaid discussion, we are of the view that the High Court committed an error in setting aside the order of conviction in exercise of revisional jurisdiction. No sufficient ground has been mentioned by the High Court in its judgment to enable it to exercise its revisional jurisdiction for setting aside the conviction”, the Bench said.
Senior Advocate Aparna Bhat appeared for the appellant and Senior Advocate Anand Sanjay M Nuli appeared for the respondent.
The dispute arose from a hand loan of Rs. 4,50,000 allegedly extended by the complainant to the accused in December 2010 for purchase of a house site, to be repaid within a year with 16% annual interest. When a cheque issued by the accused towards repayment was dishonoured for insufficient funds in 2013, the complainant filed a complaint under Section 138 of the NI Act.
The trial court convicted the accused, a finding affirmed (with reduced fine) by the Sessions Court in appeal. However, the Karnataka High Court, exercising revisional jurisdiction, set aside both concurrent findings and acquitted the accused, holding that the complainant had failed to explain the source of the loan amount given his modest income, and giving him the benefit of doubt.
Before the Supreme Court, the complainant argued that no initial burden lay on him once the statutory presumptions under Sections 118 and 139 stood invoked, and that the accused had produced no credible evidence to rebut them, relying instead on a legal notice sent after the complaint's evidence stage had concluded, alleging the cheque was actually security for an unrelated, smaller loan from a third party that had been misappropriated.
The accused maintained that the complainant's inability to explain the loan's source, absence of any written loan agreement, and discrepancy in signatures on the acknowledgment undermined the existence of a legally enforceable debt.
Reiterating the scheme of Sections 118 and 139, the Court held that once execution of the cheque is admitted, presumptions that it was drawn for consideration and towards discharge of a debt arise automatically, shifting the burden to the accused to rebut them with more than a bare denial, the accused must show it is probable, on the facts, that no such debt or consideration existed.
Examining the record, the Court found the accused's defence, that a blank cheque given as security for an unrelated Rs. 40,000 loan had been misappropriated, was unsupported by any documentary evidence, was raised only via a legal notice sent over a year after the complaint was filed and after the complainant's evidence had closed, and amounted to an afterthought and "ex post facto creation of evidence." By contrast, the complainant's account was corroborated by two independent witnesses who testified to having advanced him funds around the relevant time specifically to enable the loan to the accused.
On the limits of revisional jurisdiction, the Court held that a High Court, unlike an appellate court, cannot undertake an in-depth re-examination of oral and documentary evidence to substitute its own conclusions for concurrent findings of two courts below, absent perversity, gross error, or a glaring miscarriage of justice apparent on the record.
Accordingly, the Supreme Court set aside the High Court's order, restored the conviction and sentence recorded by the trial court as modified by the Sessions Court, and allowed the appeal.
Cause Title: Kuntegowda v. Thurubaiah (Neutral Citation: 2026 INSC 790)
Appearances:
Appellant: Aparna Bhat, Sr. Adv., Rajkumari Banju, AOR, Karishma Maria, Saransh Khandelwal, Advocates.
Respondent: Anand Sanjay M Nuli, Sr. Adv., Abhishek Kanyalur, Dharam Singh, Suraj Kaushik, Akhila Wali, Divya Sinha, Ashritsai Torgal, Tanya Chhillar, Advocates M/S. Nuli & Nuli.