1. Background of the Case
The dispute arose from a friendly loan of ₹6 lakh advanced by Sanjabij Tari to Kishore S. Borcar. A cheque issued towards repayment was dishonoured, leading to prosecution under Section 138 of the Negotiable Instruments Act.
The Trial Court and Sessions Court had found against the accused. However, the Bombay High Court at Goa reversed those findings and acquitted him. The complainant challenged the High Court’s decision before the Supreme Court.
The central issue included whether a cash loan exceeding ₹20,000, advanced contrary to Section 269SS of the Income Tax Act, could automatically be treated as a debt that was not legally enforceable for the purposes of Section 138 of the NI Act.
2. Key Findings of the Supreme Court
A. Cash loan above ₹20,000 is not automatically unenforceable
Section 269SS of the Income Tax Act generally restricts the acceptance of certain loans of ₹20,000 or more otherwise than through prescribed banking or electronic modes.
However, the Supreme Court clarified that a violation of Section 269SS does not, by itself, automatically render the underlying debt legally unenforceable under Section 138 of the NI Act. The tax-law violation and the existence of an enforceable debt are distinct legal questions.
B. Presumption in favour of the cheque holder
Sections 118 and 139 of the Negotiable Instruments Act provide statutory presumptions concerning consideration and the liability for which a cheque was issued.
Where the execution of a cheque is admitted or established, the relevant presumptions operate in favour of the complainant. The accused can rebut them by raising a probable defence; the presumptions do not make conviction automatic in every case.
The judgment reinforces that courts must give proper effect to these statutory presumptions rather than routinely placing the entire burden of proving the transaction on the complainant.
C. Supreme Court directs faster disposal of cheque bounce cases
Recognising the enormous backlog of Section 138 cases, the Supreme Court reiterated and issued directions to improve the efficiency of proceedings. Important measures include:
- Faster service of summons: Courts should use prescribed methods, including dasti service where appropriate, and electronic service in accordance with applicable law.
- Greater use of summary trials: Summary procedure should ordinarily be followed unless reasons justify adopting a different procedure.
- Online payment facilities: District Courts should facilitate secure digital payments so that the cheque amount can be paid promptly.
- Early settlement: Courts should facilitate compounding of offences and appropriate release of deposited or paid amounts.
- Accountability in service of summons: Complainants must comply with applicable requirements for filing affidavits of service; false affidavits may invite legal consequences.
- Monitoring pendency: Courts should monitor disposal, settlements and adjournments to improve case management.
3. Conclusion
The Supreme Court’s ruling in Sanjabij Tari v. Kishore S. Borcar, dated 25 September 2025, is an important development in cheque bounce law. It confirms that a cash loan exceeding ₹20,000 does not become automatically unenforceable merely because it violates the prescribed mode of transaction under Section 269SS of the Income Tax Act.
The judgment also reinforces the statutory presumptions under Sections 118 and 139 of the NI Act and highlights the need for faster disposal of cheque dishonour cases.
Legal Crusader provides legal assistance in cheque bounce disputes, recovery proceedings and litigation under Section 138 of the Negotiable Instruments Act.
