Kishan Rao v Shankargouda: Supreme Court Restores Conviction in Section 138 Cheque Bounce Case
The Supreme Court restored a cheque dishonour conviction after finding that the High Court had wrongly interfered in revision. The case explains the presumption under Section 139 of the Negotiable Instruments Act, 1881, and why an unsupported denial of liability does not ordinarily rebut it.
| Case | Kishan Rao v. Shankargouda |
|---|---|
| Case number | Criminal Appeal No. 803 of 2018 (arising from SLP (Crl.) No. 10030 of 2016) |
| Judgment date | 2 July 2018 |
| Coram | Justice A. K. Sikri and Justice Ashok Bhushan |
| Relevant provisions | Sections 118(a), 138 and 139, Negotiable Instruments Act, 1881; revisional jurisdiction under the Code of Criminal Procedure, 1973 (applicable to the original proceedings) |
| Outcome | Complainant's appeal allowed; High Court judgment set aside; trial court conviction, as affirmed in appeal, restored |
| Official judgment | Read Supreme Court judgment (PDF) |
Facts and procedural history
The complainant, Kishan Rao, and the accused, Shankargouda, knew each other. According to the complainant, the accused sought a business loan of Rs. 2,00,000, which was advanced on 25 December 2005 on an assurance of repayment within one month. A post-dated cheque dated 25 January 2006 for the same amount was issued in the complainant's favour.
When the cheque was presented through the Bank of Maharashtra, Gulbarga, it was dishonoured for insufficient funds. On a subsequent presentation on 1 March 2006, it was again returned unpaid on 2 March 2006. The complainant served a demand notice, received by the accused on 14 March 2006; the accused replied on 31 March 2006.
A complaint under Section 138 followed. The complainant testified and examined two other witnesses, producing documentary evidence. The accused suggested that the cheque had been stolen and disputed his signature, but did not lead oral or documentary defence evidence. The trial court rejected the theft allegation, applied Section 139 and convicted the accused, imposing six months' simple imprisonment and a fine of Rs. 2,50,000.
The first appellate court affirmed the conviction. The Karnataka High Court, however, allowed the accused's criminal revision on 18 March 2016, holding that doubt had been created about the underlying debt. The complainant appealed to the Supreme Court.
What the Supreme Court decided
The Supreme Court held that the High Court had exceeded the proper scope of its revisional jurisdiction. The trial and appellate courts had accepted the evidence that the cheque bore the accused's signature and had been delivered for presentation. The defence of theft had been rejected on the facts.
The Court explained that the presumption under Section 139 was correctly invoked and had not been rebutted. The High Court had not identified adequate grounds to displace the concurrent findings. It therefore allowed the complainant's appeal, set aside the High Court judgment and restored the conviction and sentence.
The judgment drew on the principles explained in Kumar Exports v. Sharma Carpets and Rangappa v. Sri Mohan: a statutory presumption is rebuttable, but the accused must point to circumstances or evidence that make the non-existence of a legally enforceable debt reasonably probable. A mere assertion does not suffice.
Relevant provisions of the Negotiable Instruments Act, 1881
Section 138 - Dishonour of cheque
Section 138 creates a criminal offence when a cheque issued towards a legally enforceable debt or liability is dishonoured for insufficient funds or because it exceeds the arrangement with the bank, subject to statutory conditions. The punishment may extend to two years' imprisonment, a fine up to twice the cheque amount, or both.
Ordinarily, the payee must present the cheque within its validity, issue a written demand notice within 30 days of receiving information of dishonour, and allow the drawer 15 days from receipt of the notice to pay. The statutory text refers to six months or the cheque's validity, whichever is earlier; under prevailing banking practice, most cheques are valid for three months.
Section 118(a) - Presumption of consideration
Unless the contrary is proved, every negotiable instrument is presumed to have been made or drawn for consideration. This presumption operates with Section 139 where execution is established.
Section 139 - Presumption in favour of holder
Section 139 requires the court to presume, unless the contrary is proved, that the holder received the cheque towards discharge of a debt or other liability. The presumption includes the existence of a legally enforceable liability, but it is rebuttable. The accused can rely on the complainant's materials, cross-examination and surrounding circumstances; entering the witness box is not mandatory in every case.
Sections 142, 143A, 147 and 148 - Procedure and remedies
- Section 142: Specifies cognizance, limitation and jurisdiction rules for cheque dishonour complaints.
- Section 143A: Permits the trial court, in qualifying circumstances, to order interim compensation up to 20% of the cheque amount; its application is governed by the statutory conditions and relevant case law.
- Section 147: Makes offences under the Act compoundable, subject to judicial principles.
- Section 148: Empowers an appellate court hearing an appeal against conviction to order a deposit of at least 20% of the fine or compensation awarded by the trial court, subject to applicable judicial interpretation.
For the current statutory text, consult the Negotiable Instruments Act, 1881 on India Code (official PDF).
Practical implications and current procedural law
For complainants: Preserve the original cheque, bank return memo, proof of service of statutory notice and documents showing the transaction. Compliance with Section 138 notice and limitation requirements remains essential.
For accused persons: The presumption is not conclusive. A probable defence may arise from documentary records, admissions or inconsistencies in the complainant's case. However, an unsupported claim that the cheque was stolen, without persuasive supporting circumstances, may fail.
On revision: The ruling concerns the limits of revisional interference with concurrent factual findings. The original proceedings were governed by the Code of Criminal Procedure, 1973. For proceedings governed by the Bharatiya Nagarik Suraksha Sanhita, 2023, the corresponding current procedural provisions and statutory transition or savings rules must be considered. The substantive cheque dishonour offence remains governed by the Negotiable Instruments Act, 1881.
This article explains the judgment delivered in 2018 and distinguishes its historical procedural context from subsequently enacted legislation. It is general legal information, not advice on any particular case.
Read or download the Supreme Court judgment
Read the official Supreme Court judgment dated 2 July 2018 (PDF). The original locally hosted PDF link is also retained below.
Download the judgment from LawDadi (PDF)
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Frequently asked questions
Does Section 139 mean the accused is automatically guilty?
No. It establishes a rebuttable presumption in favour of the cheque holder after the necessary foundational facts are proved. The prosecution must still satisfy the statutory requirements and the accused can establish a probable defence.
Can a High Court reverse a cheque bounce conviction in revision?
Yes, where a recognised ground for revisional interference exists. In Kishan Rao, the Supreme Court found that the High Court had not supplied a legally sufficient basis to disturb concurrent findings.
What was the final result in Kishan Rao v Shankargouda?
The complainant's appeal was allowed and the trial court's conviction and sentence, affirmed by the appellate court, were restored.