Introduction
In a significant ruling that breathes new life into the credibility of cheques as a trusted financial instrument, The Supreme Court of India has delivered a landmark judgment in Sanjabij Tari v. Kishore S. Borcar & Anr. (2025 INSC 1158). Delivered on September 25, 2025, by Justices Manmohan and N.V. Anjaria, this decision not only reinforces the statutory presumptions under the Negotiable Instruments Act, 1881 (NI Act), but also introduces comprehensive guidelines to tackle the overwhelming backlog of cheque bounce cases plaguing Indian courts. For businesses and individuals relying on cheques for transactions, this verdict offers much-needed relief, clarifying that cash loans exceeding ₹20,000 remain valid and enforceable debts, unshackled by Income Tax Act violations. This case underscores the NI Act’s core objective to instill discipline in financial dealings and expedite resolutions, rather than turning every dishonoured cheque into a protracted civil battle.
Facts of the Case
Sanjabij Tari, the appellant-complainant, advanced a “friendly loan” of ₹6,00,000 in cash to his close acquaintance, Kishore S. Borcar, the respondent-accused. In repayment, Borcar issued a cheque dated April 30, 2006, which was dishonoured upon presentation due to insufficient funds. Tari promptly served a statutory notice under Section 138 of the Negotiable Instruments Act (NI Act), demanding payment within 15 days. Borcar neither replied nor settled the amount, prompting Tari to file a criminal complaint.
The Trial Court, on April 30, 2007, convicted Borcar under Section 138, sentencing him to pay ₹7,50,000 (cheque amount plus interest and costs) in instalments, holding that the presumptions under Sections 118 and 139 NI Act stood unrebutted. The Sessions Court upheld this on September 17, 2008, noting Tari’s financial capacity through borrowings from his father (a cloth merchant) and a financial institution.
However, in revisional jurisdiction, the Bombay High Court at Goa acquitted Borcar ex-parte on April 16, 2009, citing Tari’s alleged financial incapacity and claiming the cheque was a “blank security” issued to facilitate a bank loan for Tari. Tari’s plea to recall the order under Section 482 CrPC was dismissed, leading to the Supreme Court appeal.
Legal Issues
1. Could the High Court upend concurrent factual findings of the Trial and Sessions Courts without evidence of perversity?
2. Do Sections 118 and 139 create a mandatory presumption of consideration and enforceable debt upon cheque execution, and how is it rebutted in cash loan scenarios?
3. Does the accused’s challenge to the complainant’s ability to lend shift the onus back, especially without independent evidence?
4. Does breaching Section 269SS (prohibiting cash loans over ₹20,000) invalidate the debt under Section 138 NI Act?
5. Is a claim of issuing a blank cheque for bank loan purposes a credible rebuttal?
6. What measures can expedite disposal and encourage compounding in the face of massive NI Act case backlogs?
Arguments by Complainant
Tari argued that the High Court overstepped by re-appreciating evidence in revisional jurisdiction, ignoring the NI Act’s presumptions that arise automatically on cheque admission. He refuted financial incapacity claims, explaining the loan was sourced from his father’s business and a personal loan, corroborated by his testimony. Borcar’s earlier plea for leniency during sentencing offering instalment payments admitted liability. Tari urged restoration of lower court orders and recall of the ex-parte acquittal, emphasizing non-reply to the notice as tacit admission.
Arguments by Respondent
Borcar countered that Tari’s ₹2,300 monthly salary couldn’t sustain a ₹6 lakh loan, especially given his debts, rendering the transaction suspicious without receipts. Citing Rangappa v. Sri Mohan (2010) and APS Forex Services v. Shakti International (2020), he claimed the onus shifted to Tari to prove capacity post-challenge. The cheque, he insisted, was blank and signed merely to help Tari secure a bank loan, not for debt discharge a probable defence under Section 139.
Relevant Laws
• Section 138 NI Act: Criminalizes dishonour due to insufficient funds, punishable by up to 2 years imprisonment or twice the cheque amount as fine.
• Section 118 NI Act: Presumes the cheque was drawn for consideration.
• Section 139 NI Act: Presumes it was issued in discharge of a legally enforceable debt (rebuttable by probable defence).
• Section 143A NI Act: Empowers interim compensation up to 20% of the cheque amount.
• Section 147 NI Act: Allows compounding at any stage.
• Section 482 BNSS: Inherent powers to recall orders.
• Section 251 BNSS: Pre-trial questioning of the accused.
• Section 269SS Income Tax: bars cash loans over ₹20,000 to curb black money.
Supreme Court Judgment
In a resounding victory for cheque holders, the Supreme Court allowed Tari’s appeal, set aside the High Court’s acquittal, and restored the lower courts conviction. Borcar was ordered to pay ₹7,50,000 in 15 monthly instalments of ₹50,000, with default triggering 6 months’ simple imprisonment.
The Bench meticulously dismantled Borcar’s defences Presumptions under Sections 118 and 139 are mandatory upon execution admission, rebuttable only by the accused’s credible evidence not mere cross-examination or selective testimony (Bir Singh v. Mukesh Kumar, 2019). The blank cheque claim was dismissed as absurd given the account’s insufficiency. Non-reply to the notice inferred validity (MMTC Ltd. v. Medchl Chemicals, 2002), and revisional courts can’t re-weigh facts sans perversity. Crucially, IT Act breaches don’t nullify NI Act debts only penalties apply, overruling P.C. Hari v. Shine Varghese (Kerala HC, 2025). Probation benefits were affirmed for NI Act offenders, emphasizing the quasi-criminal, civil-essence nature (P. Mohanraj v. Shah Brothers, 2021).
To combat pendency, the Court invoked Article 142 for nationwide guidelines effective November 1, 2025: dasti/electronic summons, UPI/QR payments, standardized complaints, no pre-cognizance summons, interim deposits, physical hearings for settlements, evening courts, dashboards for monitoring, and revised compounding costs (0% pre-defence evidence, scaling to 10% at Supreme Court).
Key Takeaways
• Presumption Powerhouse: Accused must lead evidence to rebut NI Act presumptions; complainant’s cross-examined testimony alone won’t suffice unless totality disproves debt.
• Cash Loans Safe: Section 269SS violations don’t bar Section 138 enforcement—relief for undocumented friendly loans.
• Judicial Restraint: High Courts’ revisional role is supervisory, not appellate; concurrent findings bind absent glaring errors.
• Early Settlement Push: Revised compounding and digital tools aim to slash delays, promoting NI Act as a swift recovery mechanism.
• Tech for Justice: Electronic service and online payments modernize proceedings, aligning with BNSS reforms.
Landmark Judgments
- Bir Singh v. Mukesh Kumar (2019): Limits high courts revisional jurisdiction
- Damodar S. Prabhu v. Sayed Babalal H (2010): Framework for compounding section 138 offences; inform the revised compounding costs to encourage settlements.
- Rangappa v. Sri Mohan (2010): Establishes that presumptions under Sections 118 and 139 NI Act are rebuttable.
- Indian Bank Association v. Union of India (2014): Highlights chronic backlog in NI Act cases.
- P. Mohanraj v. Shah brothers Ispat Pvt. Ltd. (2021): Views Section 138 proceedings as quasi-civil.
My Personal Opinion
The Sanjabij Tari decision is a forceful declaration that justice for commercial matters will no longer be held hostage by technicalities or procedural sloth. It’s a victory for digital efficiency, for the reliability of financial instruments, and, most importantly, for the creditors who have waited years for their legitimate dues. This is the new, streamlined reality for cheque bounce litigation.
Conclusion
The Supreme Court’s ruling in Sanjabij Tari v. Kishore S. Borcar (2025 INSC 1158) is a landmark in cheque dishonour jurisprudence. It clarifies substantive law on presumptions and enforceability of debts, limits revisional interference, and introduces forward-looking procedural reforms to tackle backlog. By combining doctrinal clarity with systemic innovation, the Court has taken a decisive step toward restoring efficiency and credibility in cheque bounce litigation, which forms a significant portion of India’s trial court docket.
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