High Court of Karnataka Acquits Accused in Cheque Bounce Case Due to Failure to Prove Legally Enforceable Debt. Dishonour of Cheque Under Section 138 of Negotiable Instruments Act, 1881 — Presumption Under Section 139 Rebutted by Accused Showing Loan Not Advanced.

High Court: Karnataka High Court Bench: BENGALURU In Favour of Accused

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2026-05-18 15:17:23

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Case Note & Summary

The case involves a criminal revision petition filed by the accused, Jagadish R, challenging his conviction under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) for dishonour of a cheque. The complainant, B S Ravi (since deceased, represented by legal representatives), alleged that the accused borrowed Rs. 3,00,000 and issued a cheque which was dishonoured. The trial court convicted the accused, and the appellate court confirmed the conviction. The accused then filed this revision before the High Court of Karnataka. The key facts are that the complainant claimed to have advanced a loan of Rs. 3,00,000 to the accused, but the accused denied receiving any loan and contended that the cheque was given as security for a business transaction. The High Court examined the evidence and found that the complainant failed to prove the source of funds for the alleged loan, as no bank statements or other documents were produced. The court noted that the presumption under Section 139 of the NI Act is rebuttable, and the accused had successfully rebutted it by showing inconsistencies in the complainant's case. The court held that the conviction was unsustainable and set aside the judgments of the lower courts, acquitting the accused. The decision emphasizes that in cheque bounce cases, the complainant must prove the existence of a legally enforceable debt, and mere issuance of a cheque does not suffice if the accused raises a plausible defence.

Headnote

A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Legally Enforceable Debt - The complainant must prove that the cheque was issued in discharge of a legally enforceable debt or liability. Mere issuance of cheque and its dishonour does not automatically lead to conviction if the accused rebuts the presumption under Section 139 by showing that the debt was not legally enforceable. (Paras 10-15)

B) Negotiable Instruments Act - Presumption under Section 139 - Rebuttal - The presumption under Section 139 of the NI Act is rebuttable. The accused can rebut the presumption by raising a probable defence, such as showing that the loan was not advanced or that the cheque was given as security. The standard of proof for rebuttal is preponderance of probabilities. (Paras 12-14)

C) Evidence Act - Burden of Proof - Section 101 - The burden of proving the existence of a legally enforceable debt lies on the complainant. If the complainant fails to produce satisfactory evidence, such as source of funds or loan documents, the accused is entitled to acquittal. (Paras 13-15)

Issue of Consideration

Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 is sustainable when the complainant failed to prove the existence of a legally enforceable debt and the accused successfully rebutted the presumption under Section 139 of the Act.

Final Decision

The High Court allowed the revision petition, set aside the judgments of the trial court and appellate court, and acquitted the accused of the charges under Section 138 of the Negotiable Instruments Act, 1881.

Law Points

Presumption under Section 139 NI Act is rebuttable
accused can rebut by preponderance of probabilities
complainant must prove legally enforceable debt
failure to produce source of funds or documentary evidence leads to acquittal

Case Details

2026 LawText (KAR) (04) 7

CRL.RP No. 1081 of 2018

2026-04-16

V Srishananda

Rishi Pal Singh Varma (for petitioner), Chandrashekar P Patil (for respondents)

Jagadish R

B S Ravi (since dead, represented by legal representatives: Smt. Sheelavathi B M, Sri Jayanth Ravi B, Lavanya B R)

Nature of Litigation

Criminal revision petition against conviction under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of cheque.

Remedy Sought

The petitioner/accused sought to set aside the judgments of the trial court and appellate court and to acquit him of the charges under Section 138 of the NI Act.

Filing Reason

The accused was convicted for dishonour of a cheque allegedly issued towards repayment of a loan, which he denied receiving.

Previous Decisions

The trial court (13th ACMM, Bangalore) convicted the accused in C.C. No. 3975/2015 on 21.09.2016. The appellate court (LXVIII City Civil and Session Judge, CCH-69, Bangalore) confirmed the conviction in Crl.A. No. 1154/2016 on 09.08.2018.

Issues

Whether the conviction under Section 138 of the NI Act is sustainable when the complainant failed to prove the existence of a legally enforceable debt? Whether the accused successfully rebutted the presumption under Section 139 of the NI Act?

Submissions/Arguments

The accused argued that no loan was advanced and the cheque was given as security for a business transaction, and the complainant failed to prove the source of funds. The complainant contended that the cheque was issued towards repayment of a loan and the presumption under Section 139 applies.

Ratio Decidendi

The presumption under Section 139 of the Negotiable Instruments Act is rebuttable. The accused can rebut it by raising a probable defence, such as showing that the loan was not advanced. The complainant must prove the existence of a legally enforceable debt. Failure to produce evidence of source of funds or loan documents leads to acquittal.

Judgment Excerpts

Heard Sri Rishi Pal Singh Varma, learned counsel for the petitioner and Sri Chandrashekar P Patil, learned counsel for the respondents. The presumption under Section 139 of the NI Act is rebuttable and the accused has successfully rebutted the same.

Procedural History

The complainant filed a complaint under Section 138 of the NI Act in C.C. No. 3975/2015 before the 13th ACMM, Bangalore, which convicted the accused on 21.09.2016. The accused appealed to the LXVIII City Civil and Session Judge, CCH-69, Bangalore, in Crl.A. No. 1154/2016, which dismissed the appeal on 09.08.2018. The accused then filed this criminal revision petition under Section 397 r/w 401 Cr.P.C. before the High Court of Karnataka.