Negotiable Instruments Act – Presumptions under Sections 118 & 139 Must Be Given Full Effect; High Courts Cannot Upset Concurrent Convictions in Revision
Case Name: Sanjabij Tari v. Kishore S. Borcar & Another
Citation: Criminal Appeal No. 1755 of 2010; 2025 INSC 1158
Date of Judgment: 25 September 2025
Bench: Justice Manmohan and Justice N.V. Anjaria
Held: The Supreme Court held that once the execution of a cheque is admitted, the statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 arise in favour of the complainant. These presumptions can be rebutted only by cogent evidence, not by speculative claims of financial incapacity. The High Court, in its revisional jurisdiction, erred in setting aside concurrent findings of conviction by the Trial Court and Sessions Court. The Court restored the conviction and issued comprehensive guidelines for expeditious disposal of Section 138 NI Act cases, including modified compounding costs and procedural reforms.
Summary: The appellant-complainant had advanced a friendly loan of ₹6,00,000 to the accused, who issued a cheque that was dishonoured. Both the Trial Court (30.04.2007) and the Sessions Court (17.09.2008) convicted the accused under Section 138 NI Act. However, in revision, the Bombay High Court (Goa Bench) acquitted the accused on 16.04.2009, holding that the complainant lacked financial capacity.
The Supreme Court held that the High Court wrongly ignored the statutory presumptions under Sections 118 and 139, which shift the burden to the accused. It rejected the defence that a blank cheque had been issued to enable the complainant to secure a bank loan, calling it “unbelievable and absurd.” It noted that no independent evidence was led to establish the complainant’s incapacity, and the accused failed to even reply to the statutory demand notice. The Court clarified that breach of Section 269SS of the Income Tax Act, 1961 (cash loans above ₹20,000) does not render such transactions unenforceable for NI Act purposes, but merely attracts penalty under Section 271D IT Act.
Concerned about the massive pendency of cheque bouncing cases—nearly 6.5 lakh in Delhi and 1.17 lakh in Mumbai—the Court issued significant directions: (i) summons to be served dasti and electronically; (ii) online payment facilities to enable early settlement; (iii) mandatory synopsis format for all complaints; (iv) relaxation of pre-cognizance summons; (v) realistic pecuniary limits for evening courts; and (vi) dashboards and review mechanisms by District and High Courts. It also revisited the Damodar S. Prabhu (2010) compounding guidelines, reducing graded costs to 5–10% depending on the stage of litigation.
Decision: The Supreme Court allowed the appeal, set aside the Bombay High Court’s order, and restored the conviction and sentence passed by the Trial Court and Sessions Court. The accused was directed to pay ₹7,50,000 in 15 monthly instalments of ₹50,000 each. The Court mandated that the new guidelines for Section 138 NI Act cases be implemented by High Courts and District Courts no later than 01.11.2025.