The Supreme Court on 7 April 2026 allowed the appeal filed by Renuka and set aside the orders of the Sessions Court and the Bombay High Court that had quashed the complaint filed by her under Section 138 of the Negotiable Instruments Act, 1881. Justices J.K. Maheshwari and Atul S. Chandurkar restored the complaint (CC1831/SC/2022) for adjudication on merits before the learned Metropolitan Magistrate.
The case arose from a matrimonial settlement between the appellant and her husband. As part of the settlement, the husband agreed to pay ₹50 crores to the appellant. The second respondent (a close friend of the husband) issued a cheque of ₹50 crores dated 12 January 2022 in favour of the appellant to act as a guarantor/mediator and to keep the amount in escrow till actual payment. The appellant signed the Declaration-cum-Indemnity document on 13 January 2022. When the cheque was presented, it was dishonoured with the remark “payment stopped by drawer”. After issuance of statutory notice and non-payment, the appellant filed the complaint under Section 138 NI Act.
The learned Metropolitan Magistrate, being prima facie satisfied, issued process on 17 June 2022. The second respondent challenged the order before the Sessions Court, which set it aside on 30 December 2022, holding that there was no legally enforceable debt on the date of issuance of the cheque. The Bombay High Court dismissed the writ petition under Article 227, upholding the Sessions Court’s order.
Allowing the appeal, the Supreme Court held that once the basic ingredients of Section 138 NI Act are satisfied — issuance of cheque, its dishonour, service of statutory notice and filing of complaint within time — the statutory presumption under Section 139 comes into operation. The burden shifts on the drawer to rebut the presumption that the cheque was issued for discharge of a legally enforceable debt or liability. Such rebuttal can only be made during the course of trial and not at the pre-trial stage while considering issuance or quashing of process.
The Court observed:
“when the basic ingredients of Section 138 stand duly satisfied and the statutory presumption under Section 139 gets triggered, coming to a conclusion that the cheque was not issued for a legally enforceable debt at the pre-trial stage itself without granting an opportunity to the complainant to substantiate her case by leading evidence would amount to ignoring the statutory presumption that the cheque had been issued for a legally enforceable debt or liability. As a consequence, the presumption under Section 139 of the N.I. Act gets washed away even prior to commencement of the trial.”
The Court clarified that disputed questions regarding existence of legally enforceable debt are questions of fact to be determined only at the trial on the basis of evidence. Reliance was placed on Rangappa v. Sri Mohan (2010) and Rajesh Jain v. Ajay Singh (2023).
The complaint has been restored for trial on merits. The Court made it clear that the observations in the judgment shall not be treated as an expression of opinion on the merits of the case.
Case Title: Renuka v. The State of Maharashtra and Another
Case No.: Criminal Appeal No. of 2026 (arising out of SLP (Crl.) No. 7829 of 2023)
Date of Judgment: 7 April 2026
Coram: Hon’ble Mr. Justice J.K. Maheshwari and Hon’ble Mr. Justice Atul S. Chandurkar
Click HERE for full Judgment.
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