Supreme Court restores convictions in cheque-bouncing case, frames detailed directions to expedite Section 138 trials

A Bench of Justices Manmohan and N.V. Anjaria heard an appeal by the complainant challenging an ex parte judgment of the Bombay High Court, Goa Bench dated 16 April 2009 which had acquitted the accused under Section 138 of the Negotiable Instruments Act and reversed concurrent convictions of the Trial Court and the Sessions Court. The appeal raised the narrow question whether the High Court, in revisional jurisdiction, could upset concurrent findings that the dishonoured cheque had been issued in discharge of a legally enforceable debt, and whether the accused had rebutted statutory presumptions under Sections 118 and 139 of the NI Act.

The Court allowed the appeal, set aside the High Court order and restored the judgments of the Trial Court and the Sessions Court. It directed the accused to pay Rs. 7,50,000 in 15 equal monthly instalments of Rs. 50,000 each and issued comprehensive guidelines aimed at speeding up and settling Section 138 cases. The Bench emphasised that once execution of a cheque was admitted, statutory presumptions arose and the accused bore the initial onus to rebut them. The Court, in its reasoning, observed: The Bench further held that the presumption was rebuttable but that no materials were placed by the accused to show the complainant’s financial incapacity.

Background The dispute arose from a cheque for Rs. 6,00,000 issued by the accused in favour of the complainant which was returned unpaid. The Trial Court convicted the accused under Section 138, holding that the accused had failed to rebut the presumptions and that the complainant had proved the antecedent friendly loan by testimony and documentary evidence regarding the cheque and its dishonour. The Sessions Court affirmed that the complainant’s evidence was sufficient and rejected the accused’s plea that the complainant lacked means to advance such a loan. The High Court, exercising revisional jurisdiction, reversed and acquitted the accused on the view that a signed blank cheque produced to obtain a bank loan rebutted the statutory presumption. On appeal, the Supreme Court found that the High Court, in revision, had re‑examined concurrent factual findings without perversity and therefore erred.

The Bench recorded that the accused had filed no independent evidence to establish the complainant’s financial incapacity and had not replied to the statutory demand notice, which permitted an adverse inference. The Court described the High Court’s acceptance of the “signed blank cheque” defence as “unbelievable” and reproduced the Sessions Court’s observation that: “It is funny to say that for obtaining loan from the bank, one can show a cheque which is issued on an account in which there are not sufficient funds. The case of the accused is unbelievable.” The Supreme Court also considered wider systemic concerns and issued directions to reduce pendency of Section 138 cases, including permitting service of summons by the complainant (dasti) and electronic means, mandating an affidavit of service, creation of online payment facilities and QR/UPI links for immediate settlement, a prescribed synopsis format for complaints, dispensation with pre-cognizance summons in certain cases, power to elicit short preliminary responses under procedural provisions, encouragement of early interim deposits under Section 143A, promotion of compounding and specified graded compounding percentages, setting up dashboards and administrative committees for monitoring, and timetables for implementation. The Court clarified that certain High Court and High Court/bench decisions were set aside to the extent they conflicted with these principles; it also revisited and modified earlier compounding guidelines and directed implementation of reforms by 1 November 2025.

Case No.: Criminal Appeal No. 1755 of 2010 Case Title: Sanjabij Tari v. Kishore S. Borcar & Anr. Appearances: For the Petitioner(s): Mr. Amarjit Singh Bedi, Advocate For the Respondent(s): Mr. Ankit Yadav, Advocate