The Supreme Court has restored the conviction of a man in a cheque dishonour case, ruling that the Karnataka High Court exceeded the limits of its revisional jurisdiction by re-evaluating evidence and overturning concurrent findings of two lower courts. The Court held that once the statutory presumptions under the Negotiable Instruments Act come into operation, the burden shifts to the accused to rebut them with credible evidence, which was not done in the present case.
Background of the Case
The dispute arose from a hand loan of ₹4.5 lakh allegedly advanced by the complainant to the accused in December 2010 for the purchase of a house site. According to the complainant, the accused later issued a cheque dated 20 March 2013 towards repayment. However, when the cheque was presented for encashment, it was returned unpaid due to insufficient funds.
After serving the mandatory legal notice and receiving no payment, the complainant initiated proceedings under Section 138 of the Negotiable Instruments Act, 1881. The trial court convicted the accused, and the appellate court upheld the conviction while reducing the amount of fine. The Karnataka High Court, however, later acquitted the accused in revision after questioning the complainant's financial capacity to lend such an amount.
Court's Observations
A Bench of Justice B.V. Nagarathna and Justice Ujjal Bhuyan held that the High Court had adopted an incorrect approach while exercising revisional powers.
The Supreme Court explained that once the accused admits the signature on the cheque, statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act arise in favour of the complainant. At that stage, the burden shifts to the accused to produce convincing evidence showing that the cheque was not issued towards a legally enforceable debt.
The accused claimed that the cheque had originally been handed over blank as security for a much smaller loan of ₹40,000 taken from another person and was later misused. However, the Court found no documentary proof supporting this defence. It also noted that the legal notice demanding return of the alleged security cheque was issued only after the criminal complaint had already been filed.
Referring to this conduct, the bench observed that the notice appeared to be "an afterthought" and lacked evidentiary value because it was created after the criminal proceedings had already begun.
The Court further rejected the argument that the complainant lacked the financial capacity to advance ₹4.5 lakh. It pointed out that the complainant had explained the source of funds by stating that he had received financial assistance from relatives and acquaintances, whose testimonies remained consistent during cross-examination.
The Bench observed:
"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."
It added that the accused failed to place any convincing material on record to rebut the statutory presumptions available to the complainant.
Revisional Jurisdiction Explained
The Supreme Court also examined the scope of a High Court's revisional jurisdiction. It emphasised that a revisional court is not expected to function as a second appellate court by reassessing oral and documentary evidence merely because another interpretation is possible.
According to the Bench, interference in revision is justified only when there is a glaring legal error, perversity, or miscarriage of justice. In the present case, the High Court had re-appreciated the evidence in detail without identifying any such exceptional circumstance.
The Court observed,
"the High Court erred in reversing well-reasoned and concurrent findings of conviction and sentence of the lower courts while exercising its extremely limited revisional jurisdiction."
Supreme Court's Decision
Allowing the appeal, the Supreme Court set aside the Karnataka High Court's judgment and restored the decisions of the trial court and the appellate court convicting the accused under Section 138 of the Negotiable Instruments Act.
The Bench concluded that the High Court had not identified any perversity or jurisdictional error warranting interference with concurrent findings recorded by the courts below.
Accordingly, the conviction and orders passed by the trial court and the Sessions Court were restored.
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