Supreme Court – Daily Orders
Sri Gopalaiah vs K. Manjunath on 16 July, 2026
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.583/2016
SRI GOPALAIAH APPELLANT(S)
VERSUS
K. MANJUNATH RESPONDENT(S)
O R D E R
1. Heard learned counsel for the parties.
2. This appeal is directed against the judgment and order
of remand passed by the High Court1 dated 10.10.2013
in Criminal Appeal No.228 of 20092.
3. The appellant was prosecuted for an offence punishable
under Section 138 of the Negotiable Instruments Act,
18813 on account of dishonor of two cheques drawn on
Vijaya Bank, Vidyanagar Branch. One cheque was of
Rs.8,00,000/- (Rupees Eight lakhs) and the other was
of Rs.50,000/- (Rupees Fifty Thousand). Both cheques
returned unpaid with endorsement ‘insufficient funds’
in the account. The complainant served the requisite
notice of demand on the accused. Despite service of
notice, the requisite amount was not paid. As a
result, the respondent filed a complaint.
4. The defense of the accused-appellant was that though
1 1
Signature Not Verified High Court of Karnataka at Bangalore
2 2
Digitally signed by
KAVITA PAHUJA
Criminal Appeal No.228 of 2009 : K. Manjunath vs. Sri Gopalaiah
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Date: 2026.07.17 3
18:01:55 IST
Reason:
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the two cheques bore the signature of the drawer,those were delivered to one Srinivas. One was a blank
cheque given by way of security for return of
Rs.50,000/- taken from Srinivas, and the other was a
cheque of Rs.50,000/- issued to return the money taken
from him. It was the case of the appellant that those
cheques were passed on by Srinivas to the complainant
who misused the same.
5. The complainant besides appearing as a witness
produced the relevant documents to indicate that the
necessary ingredients of the offence punishable under
Section 138 of N.I. Act were satisfied. However, the
Trial Court acquitted the appellant by holding that
except oral evidence, no documentary evidence was
produced to show that the complainant had advanced
Rs.8.50 lacs to the accused, particularly when Section
269SS of Income Tax Act proscribes receipt of loan of
amount exceeding Rs.20,000/- by cash. It, accordingly,
concluded that the complainant failed to prove
existence of a legally enforceable debt. Apart from
above, the Trial Court observed that the accused
already had funds therefore needed no money.
6. Aggrieved by the order of the Trial Court, the
complainant went in appeal. The High Court clubbed
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multiple appeals including the appeal of therespondent herein (i.e., Criminal Appeal No.228 of
2009) and decided them by a common judgment and order
dated 10.10.2013. Paragraph 17 of the impugned
judgment which deals with the appeal of the respondent
is extracted below:
“17. Regarding Crl.A. No.228/09:
This appeal is directed against the
judgment in C.C. No.417/2006 dated
12.02.2009 on the file of the
Addl.Civil Judge (Jr.Dn.)
Devanahalli acquitting the
respondent/accused Gopalaiah of the
offence punishable under section 138
of the N.I. Act. Records reveal the
complainant sought prosecution of
the respondent on the allegation
that the accused had approached him
for loan of Rs.8,50,000/- in the
month of November 2005 promising to
repay the same with interest within
three months. After expiry of the
period, when the complainant
approached the accused, he
voluntarily, issued impugned cheques
on 13.02.2006 for Rs.8,00,000/- and
Rs.50,000/- respectively. Cheques on
presentation were dishonored for
insufficiency of funds by the bank
on 25.02.2006 through its intimation
served on 09.03.2006. The
complainant issued statutory notice
about the dishonor of the cheque
which the accused received but
failed to pay the amount instead the
accused issued a reply notice on
23.03.2006 contending he has not
availed loan from the complainant.
He took up specific plea that the
complainant is a stranger to him.
He (accused) had issued two cheques
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to one Srinivas. Srinivas misused
the cheque and without authority
passed on to the complainant.
Therefore, he denied the liability
to pay the amount to the
complainant. In the trial, that
ensued, the complainant tendered
evidence as PW1 and examined two
witnesses K.B. Shankar as PW2 and
Raghavendrachar as P.W.3 and relied
on impugned cheques C1, C2, the bank
endorsements C3, notice copies C4
and C5 reply notice sent by the
accused C8. The accused tendered
evidence as DW1 and examined one
witness as DW2. He relied on D1
sale deed and passbook D2. The
learned trial Judge analyzing the
evidence opined that even though the
complainant has tendered evidence as
PW1 supporting his contention that
he lent money to the accused and
examined the manager of the bank –
as PW2 and 3. The defense of the
accused that he had issued cheque to
Srinivas and not to the complainant
for Rs.80,000/- in the month of
April 2005 has not been rebutted by
the complainant. The learned trial
Judge also noticed from the evidence
of the accused that the accused had
sufficient money with him because he
and his brother had entered into an
agreement of sale of their immovable
property and received Rs.7,50,000/-
on 24.10.2005. The accused had
further received Rs.16,00,000/- in
the month of January 2006 as seen
from D1 and D2. Thus, the learned
trial Judge has opined since the
accused had sufficient money with
him at the relevant period the
burden had shifted on the
complainant to establish that the
accused had borrowed money. In para
10 of his judgment the trial judge
has opined that the complainant has
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tended ocular evidence regarding
payment of Rs.8,50,000/- to the
accused without any document. The
complainant has not discharged the
burden of proof. The learned trial
Judge further opined the accused has
established he is earning
Rs.1,50,000/- to Rs.2,00,000/- from
agriculture and also from vending
milk earns Rs.20000/- to 30000/-
p.m. On that basis opined the
accused would not have borrowed
money from the complainant. Relying
on the decision in the case of
Shivamurthy vs. Anantharaju reported
in ILR 2008 Kar. 4629 learned Judge
has opined burden rests on the
complainant and Complainant has
failed to prove payment of amount,
presumption under section 139 of the
N.I. Act cannot be raised. On that
basis the accused has been
acquitted. As rightly contended by
the appellant’s counsel the learned
trial Judge has not analyzed the
evidence tendered by the complainant
to record finding as to whether or
not the evidence establishes the
ingredients constituting the offence
punishable under section 138 of the
N.I. Act”
7. While deciding the appeal(s) the High Court framed two
questions for it to jointly dispose of several
appeals. Those questions were as follows:
(a) Whether in an action under Section 138 of the
N.I. Act for dishounour of cheque, the
complainant is required to establish his
financial capacity to lend money?
(b) Will not presumption under Section 139 of the
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N.I. Act accrues to the benefit of thecomplainant unless the accused rebuts that
presumption?
8. After considering the law laid down by this Court in
several decisions including a three-Judge Bench
decision in Rangappa versus Sri Mohan4, the High Court
concluded that the presumption mandated by Section 139
include the existence of a legally enforceable debt or
liability and to raise that presumption, the N.I. Act
nowhere requires that complaint must contain averments
about proof of capacity of the lender. Besides above,
the High Court observed that Section 269SS refers to
the recipient of money and not the lender.
9. Based on the above conclusions, the High Court
remanded the matter for the Trial Court to decide it
afresh after considering the evidence brought on
record.
10. Aggrieved by the order of remand, on behalf of the
appellant it is submitted that the High Court failed
to consider that there was no good reason for the
appellant to borrow money when he had proved that he
was possessed of sufficient funds for having sold a
parcel of land. It has also been submitted that
4 4
(2010) 11 SCC 441
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presumption under Section 139 of the N.I. Act is a
rebuttal presumption. As there was no need to borrow,
and no documentary evidence of any loan transaction
was produced, the accused by denial of receipt of loan
had rebutted the presumption, therefore, there was no
justification to interfere with the order of acquittal
passed by the Trial Court.
11. Per contra, on behalf of the complainant – respondent
it has been submitted that the stand taken by the
accused was not consistent. Before the Trial Court the
stand taken by the accused was to the effect that the
cheque was issued to Srinivas in lieu of hand loan of
Rs.50,000/- taken by the accused; and, on 29th October
2005, Srinivas’ loan was returned but he did not
return the cheque by stating that they got misplaced,
later, he handed over the cheques to the complainant,
who misused the same. The stand in the reply to the
notice of demand was different. There it was stated
that blank cheques, without signing, were handed over
to Srinivas to negotiate a property. In such
circumstances, the statutory presumption was not
rebutted as the same could only be by leading cogent
and reliable evidence. It was submitted that once it
is proved that the cheque was drawn, and it returned
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unpaid on account of insufficient funds in the
account, the burden to prove that the cheque was not
issued to discharge a legally enforceable debt lies on
the drawer. Such presumption arises not only under
Section 139 of the N.I. Act but also under Section 118
(a) of the Act. In that light it was submitted that
since the trial court proceeded by wrongly putting the
burden on the complainant to prove legally enforceable
debt, the High Court was justified in remanding the
matter to the trial court for a fresh consideration.
12. We have accorded due consideration to the rival
submissions and have perused the materials on record.
13. As the order passed by the High Court is one of
remand, it would not be appropriate for us to
appreciate evidence and thereby express opinion on the
merits of the case. Suffice to state that once the
execution of the cheque is admitted, the presumption
under Section 118 (a)5 of the NI Act, that the cheque
in question was drawn for consideration, and the
presumption under Section 1396, that the holder of the
5 5
Section 118. Presumptions as to negotiable instruments.-
Until the contrary is proved, the following presumptions shall be made:-
(a) of consideration – that every negotiable instrument was made or drawn
for consideration, and that every such instrument, when it has been accepted,
endorsed, negotiated or transferred, was accepted, endorsed, negotiated or
transferred for consideration.
6 6
Section 139. Presumption in favour of holder:-
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cheque received the said cheque in discharge of a
legally enforceable debt or liability, arise against
the accused. Further, any breach of Section 269SS of
the Income Tax Act, 1961 is subject to a penalty under
the provisions of that Act i.e., Section 271D. Neither
Section 269SS nor Section 271 D of the Income Tax Act,
states 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
N.I. Act or rebut the presumptions under sections 118
and 139 of the N.I. 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. Consequently, the view that any
transaction in cash above Rs. 20,000 is illegal and
void and therefore does not fall within the definition
of legally enforceable debt cannot be countenanced7.
14. No doubt, the presumption under Section 139 of the
N.I. Act is rebuttable but mere denial is not
sufficient to rebut the presumption. To rebut such
It shall be presumed, unless the contrary is proved, that the holder of a cheque
received the cheque of the nature referred to in section 138 for the discharge, in
whole or in part, of any debt or other liability.
7 7
See: 2025 SCC OnLine SC 2069: Sanjabi Tari v. Kishore S. Borcar & Anr.,
para 20
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presumption the accused, inter alia, would have to
explain the circumstances in which the cheque in
question came to be issued and as to how it came to be
with the payee thereof. Circumstance that the payee
had no funds to create a legally enforceable debt of
the amount equivalent to the cheque is a circumstance,
if proved, which may help in dislodging the
presumption.
15. In the instant case, it appears, the complainant had
led evidence to show his capacity to lend. However,
the trial court did not properly consider the evidence
on record.
16. In such circumstances, we are of the view that the
High Court committed no error in remanding the matter
to the Trial Court. The appeal is, therefore,
dismissed. The Trial Court shall proceed expeditiously
bearing in mind that this complaint relates to the
year 2006.
17. All pending applications shall stand disposed of.
……………………………………………………J
[MANOJ MISRA]
……………………………………………………J
[VIJAY BISHNOI]
NEW DELHI
JULY 16, 2026
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ITEM NO.103 COURT NO.11 SECTION II-E
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
CRIMINAL APPEAL NO(S). 583/2016
SRI GOPALAIAH Appellant(s)
VERSUS
K. MANJUNATH Respondent(s)
Date : 16-07-2026 This matter was called on for hearing
today.
CORAM :
HON’BLE MR. JUSTICE MANOJ MISRA
HON’BLE MR. JUSTICE VIJAY BISHNOIFor Appellant(s) : Mr. Anand Sanjay M Nuli, Sr. Adv.
Mr. Ashritsai Torgal, Adv.
Mr. Abhishekh Singh, Adv.
M/S. Nuli & Nuli, AOR
For Respondent(s) :Mr. Rahul Sharma, Adv.
Mr. S. Santanam Swaminadhan, Adv.
Ms. Aarthi Rajan, AOR
Ms. Abhilasha Shrawat, Adv.
Mr. Kartik Malhotra, Adv.
Mr. Aman Rawat, Adv.
UPON hearing the counsel the Court made the following
O R D E R
1. The appeal is dismissed in terms of the signed order
which is placed on the file.
2. Pending application(s), if any, shall stand disposed
of.
(KAVITA PAHUJA) (SAPNA BANSAL)
ASTT. REGISTRAR-cum-PS COURT MASTER (NSH)
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