Sanjabij Tari v. Kishore S. Borcar
Supreme Court of India · 25 September 2025 · 2 judges · 2025 INSC 1158
The Court restored a cheque bounce conviction set aside in revision, held that breach of Section 269SS of the Income Tax Act does not displace the Section 139 presumption, and issued guidelines for Section 138 cases.
Facts
The complainant said he gave the accused, a friend, a loan of Rs. 6,00,000, part of it borrowed from his father and part from a loan he had himself taken. The accused admitted signing the cheque, which was dishonoured, but claimed he had given a signed blank cheque to help the complainant obtain a bank loan and that the complainant lacked the means to lend. The Trial Court convicted the accused under Section 138 of the NI Act and the Sessions Court upheld the conviction. In revision, the Bombay High Court at Goa, in an ex parte judgment of 16 April 2009, acquitted the accused, and later refused to recall that order. The complainant appealed.
Questions before the Court
- Once execution of the cheque is admitted, do the presumptions under Sections 118 and 139 of the NI Act arise, and was the accused able to rebut them by questioning the complainant's financial capacity?
- Does a cash loan above Rs. 20,000 in breach of Section 269SS of the Income Tax Act cease to be a legally enforceable debt for Section 138?
- Could the High Court in revision upset concurrent findings of fact in the absence of perversity?
- What directions are needed to reduce the backlog of Section 138 cases?
What the Court held
- Once execution of the cheque is admitted, the presumptions under Sections 118 and 139 arise against the accused. They are rebuttable, but the initial onus is on the accused. Here the accused led no evidence of the complainant's financial incapacity, did not reply to the statutory notice, and his blank cheque defence was unbelievable.
- Breach of Section 269SS of the Income Tax Act attracts only a penalty under Section 271D and does not make the transaction illegal or void. It does not make the debt unenforceable under Section 138 or rebut the presumptions. The contrary view of the Kerala High Court in P.C. Hari v. Shine Varghese was set aside.
- In revisional jurisdiction the High Court does not, in the absence of perversity, upset concurrent findings of fact. The High Court's order was set aside and the conviction restored, with a direction to pay Rs. 7,50,000 in fifteen monthly instalments.
- Section 138 proceedings are quasi-criminal and compoundable, and the accused may get the benefit of the Probation of Offenders Act, 1958. District Courts and High Courts that treat these cases as civil recovery proceedings and require proof of the antecedent debt act contrary to the mandate of Parliament.
- The Court issued directions on service of summons (dasti and electronic), online payment links, a standard synopsis, no pre-cognizance summons under Section 223 BNSS, questions under Section 251 Cr.P.C./274 BNSS, interim compensation and monitoring. It revised the Damodar S. Prabhu compounding costs to nil, 5%, 7.5% and 10% by stage.
Why it matters
The judgment restates that admitted execution of a cheque raises the Section 118 and 139 presumptions, which courts must apply. It sets aside the Kerala High Court's view that cash loans in breach of Section 269SS are not legally enforceable debts. It also lays down practice directions for Section 138 trials and revises the graded compounding costs earlier fixed in Damodar S. Prabhu, to be implemented by 1 November 2025.
In the Court's words
Copied from the official judgment; each passage links to its page.
“This Court is of the view that once the execution of the cheque is admitted, the presumption under Section 118 of the NI Act that the cheque in question was drawn for consideration and the presumption under Section 139 of the NI Act that the holder of the cheque received the said cheque in discharge of a legally enforceable debt or liability arises against the accused.”
“However, this Court is of the view that any breach of Section 269SS of the IT Act, 1961 is subject to a penalty only under Section 271D of the IT Act, 1961. Further neither Section 269SS nor 271D of the IT Act, 1961 state that any transaction in breach thereof will be illegal, invalid or statutorily void. Therefore, any violation of Section 269SS would not render the transaction unenforceable under Section 138 of the NI Act or rebut the presumptions under Sections 118 and 139 of the NI Act because such a person, assuming him/her to be the payee/holder in due course, is liable to be visited by a penalty only as prescribed.”
“This Court also takes judicial notice of the fact that some District Courts and some High Courts are not giving effect to the presumptions incorporated in Sections 118 and 139 of NI Act and are treating the proceedings under the NI Act as another civil recovery proceedings and are directing the complainant to prove the antecedent debt or liability. This Court is of the view that such an approach is not only prolonging the trial but is also contrary to the mandate of Parliament, namely, that the drawer and the bank must honour the cheque, otherwise, trust in cheques would be irreparably damaged.”
“It is well settled that in exercise of revisional jurisdiction, the High Court does not, in the absence of perversity, upset concurrent factual findings [See: Bir Singh (supra)]. This Court is of the view that it is not for the Revisional Court to re-analyse and re-interpret the evidence on record.”
Provisions interpreted
Case and bench
- Parties
- Sanjabij Tari v. Kishore S. Borcar
- Case
- Criminal Appeal No. 1755 of 2010
- Decided
- 25 September 2025
- Bench
- Manmohan, N.V. Anjaria
- Opinions
- Unanimous judgment of a two-Judge Bench delivered by Manmohan, J.
Questions on this case
4 questions in live Law Maker papers mention this case. Practise them with the landmark judgments questions.