This Supreme Court judgment reinforces the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881, which arise upon admission of a cheque’s execution. It clarifies that these presumptions are rebuttable, but the initial onus is on the accused. The ruling also establishes that a violation of Section 269SS of the Income Tax Act, 1961, does not render a debt legally unenforceable for proceedings under Section 138 of the NI Act.
Facts Of The Case:
The case originated from a complaint under Section 138 of the Negotiable Instruments Act, 1881, filed by the appellant, Sanjabij Tari, concerning a cheque for Rs. 6,00,000 issued by the respondent, Kishore S. Borcar. The cheque was dishonoured due to insufficient funds. The appellant contended that the amount was a friendly loan given to the respondent, partly from his own funds and partly arranged from his father. The Trial Court and the Sessions Court concurrently convicted the respondent, holding that he failed to rebut the statutory presumptions under Sections 118 and 139 of the NI Act that the cheque was issued for a legally enforceable debt. However, the High Court, in its revisional jurisdiction, acquitted the respondent. The High Court accepted the respondent’s defence that the appellant lacked the financial capacity to lend such a substantial sum, given his modest salary, and that a signed blank cheque had been provided only to help the appellant secure a loan from a bank, not towards debt discharge. The appellant then challenged this acquittal before the Supreme Court.
Procedural History:
The procedural history of this case began with the Trial Court convicting the accused under Section 138 of the Negotiable Instruments Act, a decision which was subsequently upheld by the Sessions Court in appeal. The accused then filed a revision petition before the High Court of Bombay at Goa, which, in an ex-parte judgment, acquitted the accused and reversed the concurrent findings of the lower courts. The complainant-appellant challenged this acquittal in the Supreme Court by way of the present criminal appeal. The Supreme Court allowed the appeal, set aside the impugned judgment of the High Court, and restored the convictions and sentences ordered by the Trial Court and the Sessions Court.
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Court Observation:
The Supreme Court made several key observations, primarily reinforcing that the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act arise once the cheque’s execution is admitted. It held that the initial burden to rebut these presumptions is on the accused, and the High Court erred in re-appreciating evidence and upsetting concurrent factual findings in its revisional jurisdiction. The Court rejected the defence of the complainant’s alleged financial incapacity and the claim of a blank cheque being issued for a loan application as an unbelievable and insufficient rebuttal. It also clarified that a violation of Section 269SS of the Income Tax Act does not render a debt legally unenforceable under the NI Act. Finally, the Court issued comprehensive guidelines to reduce the massive backlog of cheque dishonour cases, focusing on expedited service of summons, promoting early settlements, and modifying the compounding cost structure.
Final Decision & Judgement:
The Supreme Court allowed the appeal, setting aside the impugned judgment of the High Court of Bombay at Goa. The concurrent judgments of the Trial Court and the Sessions Court, which had convicted the respondent-accused under Section 138 of the Negotiable Instruments Act, 1881, were restored. The Court directed the Respondent No. 1-Accused to pay a total of Rs. 7,50,000 to the appellant-complainant in 15 equated monthly instalments of Rs. 50,000 each. Additionally, the Supreme Court issued a series of comprehensive guidelines aimed at expediting the disposal of the massive backlog of cheque bouncing cases across the country, directing all High Courts and District Courts to implement them by 1st November 2025.
Case Details:
Case Title: Sanjabij Tari vs. Kishore S. Borcar & Anr. Citation: 2025 INSC 1158 Criminal Appeal No.: Criminal Appeal No. 1755 of 2010 Date of Judgement: September 25, 2025 Judges/Justice Name: Justice Manmohan and Justice N.V. Anjaria
Download The Judgement Here