Streamlining Cheque Bounce Litigation: The Supreme Court’s Deepening In Sanjabij Tari v. Kishore S. Borcar.

Introduction:

The Supreme Court of India in its recent decision in Sanjabij Tari vs. Kishore S. Borcar and anr.¹, effectively reiterates and clarifies the legal position under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The judgment deals with several key aspects, including: (i) the scope and strength of the statutory presumptions under Sections 118 and 139, (ii) how and to what extent an accused can challenge the complainant’s financial capacity, (iii) the limited grounds on which revisional courts can interfere with concurrent findings, and (iv) broader directions issued to tackle the growing backlog of cheque dishonour cases.

Brief Facts:

The complainant alleged that he advanced a friendly cash loan of INR6,00,000 to the accused.  

Towards repayment of this loan, the accused issued a cheque in favour of the complainant, which was dishonoured for insufficiency of funds. Despite receipt of the statutory legal notice issued under Section 138 of the NI Act, the accused neither replied to the notice nor made payment of the cheque amount.  

The trial court convicted the accused under Section 138, holding that he had admitted his signature on the cheque, failed to rebut the presumptions under Sections 118 and 139 of the NI Act, and that the complainant had proved existence of a legally enforceable debt, even though the loan was in cash and unsupported by written receipts.   The Sessions Court, in appeal, affirmed the conviction and rejected the accused’s plea that the complainant had no financial means to advance INR 6,00,000, noting that no evidence was led to prove the complainant’s alleged indebtedness or incapacity.  

In Revision, the High Court of Bombay at Goa, by a judgment dated 16.04.2009 set aside the concurrent findings and acquitted the accused, accepting his defence that he had given a blank signed cheque to the complainant only to enable him to obtain a bank loan, and questioning the complainant’s financial capacity.   The complainant’s application under Section 482 CrPC to recall this ex parte order was dismissed by the High Court on the ground that it had become functus officio. Thereafter, an appeal was filed before the Supreme Court by the Complainant.²

Presumptions under Sections 118 and 139 of the NI Act:

In Sanjabij Tari³, the cheque was admittedly signed by the accused. The Court observed that once execution is admitted, Section 118 raises a presumption that the cheque was drawn for consideration, and secondly, Section 139 raises a presumption that the holder received the cheque in discharge of a legally enforceable debt or liability. Pertinently, the Court in this decision has clearly stated and recorded that the observations in Krishna Janardhan Bhat vs. Dattatraya G Hegde⁴, which had been understood as diluting the presumption under Section 139 of the NI Act have been set aside by the three-Judge Bench in Rangappa vs. Sri Mohan⁵. The position draws strength from Rangappa (supra), where the Supreme Court clarified that these presumptions are mandatory and must operate in favour of the complainant.

Further, pertaining to the concept of rebuttable presumption, the Supreme Court, replying on its earlier decision in APS Forex Services Private Limited vs. Shakti International Fashion Linkers⁶, clarified that the presumption is rebuttable, and once the accused successfully raises a credible defence, the burden shifts back to the complainant to demonstrate financial capacity, especially in cases involving cash loans.  The Court clarified that just because a loan was given in cash, it does not mean the legal presumption under Section 139 disappears. Even in cheque bounce cases arising from cash transactions, the law still presumes that the cheque was issued towards a valid debt unless the accused proves otherwise.

Effect of Violation of Section 269SS of the Income Tax Act on Legally Enforceable Debt under the NI Act:

A significant aspect of the judgment deals with the link between Section 269SS of the Income-tax Act and what qualifies as a “legally enforceable debt” under Section 138 of the NI Act. The Kerala High Court in P.C. Hari v. Shine Varghese⁷ had taken the view that cash transactions above Rs. 20,000, if in violation of Section 269SS, would not amount to legally enforceable debts unless properly explained, and therefore the presumption under Section 139  cannot be made in favour of a complainant in cheque bouncing cases. The Supreme Court has clearly disagreed with this reasoning. It explained that a violation of Section 269SS only attracts a monetary penalty under Section 271D of the Income-tax Act and does not make the transaction per se illegal or void for the purposes of NI Act. As a result, such cash transactions cannot be excluded from the scope of “legally enforceable debt” under Section 138, nor can they, by themselves, weaken the statutory presumptions in favour of the complainant. Accordingly, the view taken in P.C. Hari has been expressly overruled.

Revisional Jurisdiction and Concurrent Findings:

The Supreme Court reiterates the settled position that revisional courts should not re‑appreciate evidence to disturb concurrent findings of fact in the absence of perversity or jurisdictional error. Further, this judgment reinforces limits on revisional interference with concurrent convictions.

The Court referred to Southern Sales & Services & Ors. v. Sauermilch Design and Handels GMBH⁸, to highlight that even where a subordinate court has committed an error within its jurisdiction, revisional interference is not warranted unless a jurisdictional defect is shown.  

Broader directions to tackle the growing backlog of cheque dishonour cases:

The Supreme Court in the present criminal appeal, relying on data placed before it, that in some States, cheque dishonour complaints even exceed 50% of the total pending cases in the trial courts.  The statistical context is treated as the justification for issuing broad, quasi‑administrative directions to rationalise procedure, encourage compounding, and reduce avoidable delay. 

In conceptual terms, the Court characterises Section 138 as a “civil sheep in a criminal wolf’s clothing” (borrowing the phrase from P. Mohanraj & Ors. v. Shah Brothers Ispat Pvt. Ltd.⁹), emphasising that the underlying liability is essentially civil and the object of the prosecution is primarily compensation, not incarceration.  

The judgment while referring to Indian Bank Association v. Union of India¹⁰, wherein the Court had already introduced practical steps like summary trials, day-to-day hearings, and procedural simplification to ensure quicker disposal of Section 138 cases has deepen   Supreme Court’s earlier efforts to streamline cheque bounce litigation. It also relies on Damodar S. Prabhu v. Sayed Babalal H.¹¹, which recognised these offences as compoundable and introduced a graded cost system, meaning that later a settlement is reached, the higher the additional cost, so as to discourage unnecessary delays. Further, in In Re: Expeditious Trial of Cases under Section 138¹², the Court had issued detailed directions on improving efficiency through better case management and use of technology. However, despite these measures, the backlog of cheque bounce cases remains high, which led the Court in Sanjabij Tari to revisit and strengthen the existing framework.

The Supreme Court has also backed a more structured and practical approach at the initial stage of trial, relying on the Delhi High Court’s decision in Rajesh Agarwal v. State¹³. It has approved the practice of Magistrates asking clear, focused questions to the accused right at the beginning under Section 251 CrPC (now Section 274 BNSS), such as whether the cheque and signature are admitted, whether it was issued to the complainant, and what defence is being taken. These answers are recorded and, when read along with the complaint and documents, help the court quickly understand the real dispute. This makes it easier to decide whether the case can proceed as a summary trial and ensures that the defence is clearly defined early on, thereby cutting down delays caused by vague or shifting stands during cross-examination.

Service of Summons in Section 138 Cases: A Shift Towards Practical Efficiency:

In Sanjabij Tari, the Supreme Court placed significant emphasis on improving the way summons are served in cheque dishonour cases, recognising that delays at this stage are one of the biggest reasons why such matters drag on. Traditionally, service of summons relied heavily on formal modes through court process, which often proved slow and ineffective, especially when the accused resided outside the court’s jurisdiction or avoided service.

To address this, the Court has introduced a more flexible, multi-modal approach. It has directed that service of summons should not be limited to conventional methods alone but must also be served through “dasti” service, meaning the complainant can personally serve the summons on the accused in addition to court-issued service. This is particularly useful in commercial cases where parties are already known to each other.

Further, the Court has encouraged the use of electronic modes of service, such as email and messaging platforms (including WhatsApp or similar applications), wherever possible. To make this effective, a complainant is required to provide all available contact details of the accused, like email ID, mobile number, and messaging details, supported by an affidavit confirming their correctness. This ensures accountability and reduces the chances of false or incomplete information being provided.

Overall, the Court’s approach reflects a clear shift from rigid procedure to a more result-oriented system. By combining personal service, digital communication, and accountability through affidavits, the aim is to ensure that the accused is brought before the court at the earliest stage, thereby preventing unnecessary delays and enabling faster disposal of Section 138 cases.

Conclusion:

Taken together, the decisions referred to and applied by several courts, lay down a clear and consistent framework for handling cases under Section 138 of the NI Act. The judgment clarifies that presumptions cannot be undermined by importing collateral statutory non‑compliances unless law expressly provides. The decisions referred to, herein, strengthen the statutory presumptions in favour of the complainant, limit the misuse of defences such as lack of financial capacity, and reinforce that higher courts should not casually interfere with concurrent findings on fact. At the same time, they recognise the compensatory and quasi-civil nature of these proceedings by promoting early settlement, compounding, and practical procedural reforms.

Footnotes

^{1 Judgment dated 25.09.2025 passed in Criminal Appeal No. 1755 of 2010.}

^{2 Criminal Appeal No. 1755 of 2010 dated 25.09.2025}

^{3 Criminal Appeal No. 1755 of 2010 dated 25.09.2025}

^{4 (2008) 4 SCC 54}

^{5 (2010)11SCC 441}

^{6 (2020) 12 SCC 724}

^{7 2025 SCC OnLine Ker 5535}

^{8 (2008) 14 SCC 457}

^{9 (2021) 6 SCC 258}

^{10 (2014) 5 SCC 590}

^{11 (2010) 5 SCC 663}

^{12 (2021) 16 SCC 116}

^{13 2010 SCC OnLine Del 2511}

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