Supreme Court Reaffirms Presumption in Cheque Bounce Cases, Restores Conviction and Orders Faster NI Act Trials
- REEDLAW
- Sep 26
- 3 min read
REEDLAW Legal News Network reports: In a pivotal ruling, the Supreme Court reaffirmed that once the issuance of a cheque is admitted, statutory presumptions under Sections 118 and 139 of the Negotiable Instruments Act automatically arose and could be rebutted only through credible defence evidence. The Court clarified that mere allegations regarding the complainant’s financial capacity or a purported breach of Section 269SS of the Income Tax Act were insufficient to negate the enforceability of the debt, thereby restoring the conviction and directing swifter disposal of cheque dishonour cases.
The Supreme Court Bench of Justice Manmohan and Justice N.V. Anjaria, while adjudicating a criminal appeal on 25 September 2025, held that the presumption of a legally enforceable debt under the Negotiable Instruments Act remains intact once the issuance of a cheque is admitted. The Bench further observed that to rebut this presumption, the accused must present a credible defence backed by tangible evidence. The Court rejected arguments concerning the complainant’s financial capacity and alleged violation of Section 269SS of the Income Tax Act, emphasising that such claims did not invalidate the debt or the statutory presumption.
The Supreme Court examined an appeal challenging the ex parte judgment of the Bombay High Court at Goa, which had acquitted the Respondent-Accused under Section 138 of the Negotiable Instruments Act, 1881 and reversed the concurrent findings of the Trial Court and the Sessions Court. The Appellant had alleged that the dishonoured cheque had been issued by the Respondent towards repayment of a legally enforceable debt. The Trial Court and the Sessions Court had both convicted the Respondent, holding that the cheque was issued in discharge of a friendly loan advanced by the Appellant. The High Court, exercising revisional jurisdiction, set aside these findings and acquitted the Respondent.
The Supreme Court held that once the execution of a cheque is admitted, the statutory presumptions under Sections 118 and 139 of the NI Act arise in favour of the holder that the cheque was issued for consideration and in discharge of a legally enforceable debt. It clarified that these presumptions are rebuttable, but the initial burden lies on the accused to raise a probable defence through evidence or material on record. Mere questioning of the complainant’s financial capacity, without independent evidence, was found insufficient. The Court noted that the Respondent had failed to produce any documents or witnesses to substantiate the allegation that the Appellant lacked the means to lend the money and had also failed to reply to the statutory notice, which further supported the presumption of liability.
The Court rejected the defence that a signed blank cheque had been handed over merely to facilitate the Appellant in obtaining a bank loan, terming it unbelievable. It emphasised that breach of Section 269SS of the Income Tax Act, which regulates cash transactions above ₹20,000, does not render a transaction unenforceable under the NI Act, as such breach only attracts a penalty and does not invalidate the debt itself. The Supreme Court reiterated that revisional jurisdiction cannot be used to upset concurrent factual findings absent perversity.
Observing that proceedings under Section 138 of the NI Act are quasi-criminal in nature and intended to ensure the credibility of cheques rather than to punish, the Court underscored the need for financial discipline and efficient disposal of cheque dishonour cases. Taking judicial notice of the massive pendency of such cases across the country, it issued directions to facilitate speedy service of summons, including permitting complainants to serve summons personally (dasti service). Consequently, the Supreme Court set aside the High Court’s order and restored the convictions recorded by the Trial Court and the Sessions Court.
Mr. Amarjit Singh Bedi, Advocate, represented the Appellant.
Mr. Ankit Yadav, Advocate, appeared for the Respondent No. 1.
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