Shine Varghese Koipurathu Vs State of Kerala & Anr. (Supreme Court of India)
₹20,000 Cash Limit under income tax Act Can’t Be Shield Against Cheque Bounce Prosecution- Cash Loan May Invite Penalty, Not Acquittal: SC Restores NI Act Rigour
Supreme Court in its order dated 08.12.2025, set aside Kerala High Court judgment which had acquitted accused u/s 138 of the Negotiable Instruments Act solely on the ground that loan of ₹9 lakh was advanced in cash in violation of section 269SS of the Income-tax Act.
Trial Court had convicted accused u/s 138 NI Act & awarded one year simple imprisonment with compensation of ₹9 lakh u/s 357(3) CrPC, which was affirmed by Sessions Court.
Kerala High Court reversed conviction holding that cash loan above ₹20,000 in violation of section 269SS is not a legally enforceable debt.
Supreme Court noted that this very legal proposition laid down by Kerala HC in P.C. Hari Vs Shine Varghese had already been expressly set aside by Supreme Court in Sanjabij Tari Vs Kishore S. Borcar & Anr., wherein it was held that violation of section 269SS attracts only penalty u/s 271D & does not render transaction illegal, void or unenforceable for purposes of section 138 NI Act nor rebut presumptions u/s 118 & 139 of NI Act. Since foundation of Kerala HC judgment no longer survived, Supreme Court set aside impugned order & remitted matter back to High Court for fresh consideration on merits in accordance with law, keeping all issues open. Parties were directed to appear before High Court on 17.02.2026.
