Kuntegowda v. Thurubaiah — 2026 INSC 790 — 4 August 2026
What the case was about
This appeal turned on the scope of a High Court’s power to set aside a cheque-bounce conviction while acting in revision, and on who must prove what when a signed cheque is dishonoured. The Supreme Court had to decide whether the Karnataka High Court was entitled to acquit an accused by re-examining the complainant’s private finances and by treating the accused’s “blank cheque” story as sufficient to rebut the strict statutory presumptions under the Negotiable Instruments Act, 1881 (NI Act).
The key facts
In December 2010, Kuntegowda extended a hand loan of ₹4,50,000 to Thurubaiah to help him purchase a house site. The money was to be repaid within one year with interest at 16 per cent per annum. In March 2013, Thurubaiah issued a cheque for the same amount. It was presented on 20 March 2013 but returned unpaid two days later with the remark “funds insufficient”. After a statutory demand notice on 28 March 2013 went unanswered, Kuntegowda filed Complaint Case No.12108 of 2013 under Section 138 of the NI Act.
The trial court convicted Thurubaiah on 1 September 2015, sentencing him to a fine of ₹9,00,000 and simple imprisonment for six months in default. The appellate court affirmed the conviction but reduced the fine to ₹6,50,000. Thurubaiah then filed a criminal revision petition before the Karnataka High Court, which allowed it on 6 October 2023. The High Court acquitted him, holding that Kuntegowda—whose monthly income was ₹20,000–25,000—had not disclosed the specific source of the loan and therefore lacked the financial capacity to advance ₹4,50,000. Kuntegowda appealed to the Supreme Court.
The questions before the Court
The Supreme Court framed four questions for determination:
- Whether the High Court erred in reversing concurrent findings of conviction under Section 138 of the NI Act by embarking on a fresh appreciation of the complainant’s financial capacity and source of funds.
- Whether the accused discharged the burden of rebutting the statutory presumptions under Sections 118 and 139 of the NI Act.
- Whether the complainant was required to independently prove his financial capacity and the exact source of the loan amount to sustain the conviction.
- Whether the High Court exceeded its limited revisional jurisdiction under Section 397 of the Code of Criminal Procedure, 1973 by substituting its own factual conclusions.
What the Court decided and why
A bench of Justices B.V. Nagarathna and R. Mahadevan allowed the appeal, set aside the High Court’s acquittal, and restored the conviction and modified sentence passed by the lower appellate court.
Statutory presumptions and burden of proof
The Court reaffirmed that once the execution of a cheque is proved or admitted, Sections 118 and 139 of the NI Act mandatorily raise a presumption that the instrument was issued for consideration and in discharge of a legally enforceable debt. This shifts the burden onto the accused drawer to rebut the presumption by leading cogent evidence rather than resorting to bare denial, conjecture, or afterthought.
The blank-cheque defence
Thurubaiah claimed that the cheque was a blank one given as security to PW-2, which was later misappropriated. The Court found this defence unsupported by any documentary evidence and held that the legal notice dated 16 September 2014 was an “ex post facto creation of evidence, an afterthought,” sent only after the complaint had already commenced, and therefore carried no evidentiary value (para 6.3).
Financial capacity
The Court also disagreed with the High Court’s reasoning that a modest income disproved the loan. It noted that the complainant’s testimony was corroborated by PW-2 and PW-3 regarding financial assistance he had obtained. In addition, the Court pointed out that the complainant had testified that he routinely invested in chit funds in amounts up to ₹2,00,000, which clearly established that he had the financial capacity to extend the loan (para 6.6). The Court further observed that the initial burden of raising a defence that the complainant lacked the financial capacity to advance the loan rested upon the accused and ought to have been specifically pleaded in the reply to the demand notice (para 6.7).
Limits of revisional jurisdiction
The bench stressed that the High Court’s revisional power under Section 397 of the CrPC is limited to examining the correctness, legality or propriety of an inferior court’s order; it cannot substitute its own factual conclusions by conducting a roving inquiry into the evidence, especially so as to overturn concurrent findings recorded by the trial and appellate courts. It therefore held that the High Court erred in reversing well-reasoned and concurrent findings of conviction and sentence while exercising its extremely limited revisional jurisdiction (para 6.10). The Court cited its earlier decision in State of Maharashtra v. Jagmohan Singh Kuldip Singh Anand to reiterate that a High Court “cannot embark upon an in-depth roving re-examination of the oral evidence and medical evidence and come to a conclusion contrary to the consistent one reached by two courts below” (para 7.1).
Why it matters
The judgment reinforces two pillars of cheque-bounce litigation. First, it reaffirms that once a signed cheque is dishonoured, the law presumes a valid debt, and the drawer cannot escape liability with unsupported tales of blank cheques or attacks on the payee’s income. Second, it reminds High Courts that revision is not a disguised appeal: a revisional court cannot retry facts or overturn concurrent findings simply because it disagrees with the lower courts. Together, these holdings protect both the integrity of commercial transactions and the finality of trial court verdicts.