Kuntegowda Vs Thurubaiah (Supreme Court of India)
Supreme Court Restores Cheque Bounce Conviction; Financial Capacity Alone Cannot Rebut Statutory Presumption under the NI Act
The Supreme Court, in Kuntegowda v. Thurubaiah (Judgment dated 4 August 2026), restored the conviction of the accused under Section 138 of the Negotiable Instruments Act, 1881, holding that the Karnataka High Court had exceeded its revisional jurisdiction by re-appreciating evidence and reversing concurrent findings of the Trial Court and the Appellate Court.
The complainant had advanced a hand loan of ₹4.5 lakh, for which the accused issued a cheque that was dishonoured for insufficiency of funds. Since the accused admitted his signature on the cheque, the statutory presumptions under Sections 118 and 139 of the NI Act immediately came into operation, shifting the burden onto the accused to rebut the existence of a legally enforceable debt.
The Court held that the accused failed to discharge this burden. His defence that the cheque was a blank security cheque misused by the complainant was unsupported by any contemporaneous evidence. The legal notice demanding return of the alleged security cheque was issued only after the criminal complaint had already been filed, making it an afterthought with little evidentiary value.
Rejecting the High Court’s reasoning, the Supreme Court observed that the complainant’s modest monthly income, by itself, could not establish lack of financial capacity, especially when there was evidence that he had mobilised funds from relatives and friends and such evidence remained unshaken in cross-examination. The Court also emphasised that the accused had not even raised the issue of the complainant’s financial incapacity in reply to the statutory demand notice.
The judgment reiterates that once execution of the cheque is admitted, the statutory presumptions under Sections 118 and 139 are mandatory but rebuttable, and the accused must produce cogent and probable evidence to dislodge them. Mere denial, conjectures or plausible theories are insufficient.
On the scope of revisional jurisdiction, the Supreme Court held that a High Court cannot act as a second appellate court by re-evaluating evidence merely because another view is possible. Interference is justified only where the findings of the subordinate courts are perverse, illegal, arbitrary or result in a miscarriage of justice. Since no such circumstances existed, the High Court’s acquittal was set aside and the conviction and sentence imposed by the Trial Court, as modified by the Sessions Court, were restored.
Cases Discussed
- Sanjabij Tari vs. Kishore S. Borcar, 2025 INSC 1158
- Kumar Exports vs. Sharma Carpets (Supreme Court), (2009) 2 SCC 513
- Southern Sales & Services and Ors. v. Sauermilch Design and Handels GMBH (Supreme Court), (2008) 14 SCC 457
- State of Maharashtra vs. Jagmohan Singh Kuldip Singh Anand (Supreme Court), (2004) 7 SCC 659
- Dalmia Cement (Bharat) Ltd. vs. Galaxy Traders & Agencies Ltd. (Supreme Court), (2001) 6 SCC 463
- Kusum Ingots & Alloys Ltd. vs. Pennar Peterson Securities Ltd. (Supreme Court), (2000) 2 SCC 745
- State of Kerala vs. Puttumana Illath Jathavedan Namboodiri (Supreme Court), (1999) 2 SCC 452
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
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