RENUKAversusTHE STATE OF MAHARASHTRA AND ANOTHER

                  [2026] 5 S.C.R. 26 : 2026 INSC 327

                              Renuka
                                v.
               The State of Maharashtra and Another
                    (Criminal Appeal No. 1783 of 2026)
                                 07 April 2026
           [J.K. Maheshwari and Atul S. Chandurkar,* JJ.]


                           Issue for Consideration
       Whether the Sessions Court as well as the High Court erred in
       holding that the complaint as filed by the appellant u/s.138 of the
       N.I. Act was liable to be dismissed at the pre-trial stage on the
       ground that the cheque issued by the second respondent was not
       towards any legally enforceable debt.

                                  Headnotes†
       Negotiable Instruments Act, 1881 – ss.138, 139 – Once the
       basic ingredients of s.138 are satisfied, the complaint cannot
       be dismissed at the pre-trial stage on the ground that the
       cheque issued was not towards a legally enforceable debt –
       Appellant’s case that in terms of the settlement agreement
       between her and her husband, her husband had to inter
       alia pay ₹50 crores to her – Second respondent acted as
       a guarantor and issued the cheque in question drawn in
       favour of the appellant – On being presented, the cheque got
       dishonoured with the remark ‘payment stopped by drawer’ –
       Eventually, complaint filed by the appellant u/s.138 against
       the second respondent – Process issued by Metropolitan
       Magistrate – Order set aside by Sessions Court holding that
       on the date of issuance of the cheque in question, there was
       no legally enforceable debt to be satisfied by the drawer –
       Challenged by the appellant, writ petition dismissed by High
       Court – Interference with:
       Held: Once the basic ingredients of s.138 are duly satisfied by
       the complainant, the rebuttal of statutory presumption by the
       drawer can only be made during the course of trial – The basic
       ingredients for attracting the provisions of s.138 had been duly


* Author
[2026] 5 S.C.R.                                                             27

            Renuka v. The State of Maharashtra and Another


     satisfied by the appellant, at least for issuance of process – When
     the basic ingredients of s.138 stand duly satisfied and the statutory
     presumption u/s.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 u/s.139 gets washed away even
     prior to commencement of the trial – On facts, the dismissal of
     the complaint as a consequence of setting aside the order issuing
     process is totally unjustified in the absence of any material being
     brought on record by the second respondent to rebut the statutory
     presumption and prove his contention that the cheque was
     issued not towards any enforceable debt or liability – Sessions
     Court committed an error in setting aside the order passed by
     the Metropolitan Magistrate issuing process u/s.138 – High Court
     also fell into error in upholding the order passed by the Sessions
     Judge – Both the orders set aside – Complaint filed by the appellant
     restored for adjudication on merits. [Paras 10, 11]

     Negotiable Instruments Act, 1881 – ss.138, 139 – At the stage of
     issuance of process, the statutory presumption u/s.139 cannot
     be dislodged in a summary manner merely by contending
     that the cheque issued was not for any legally enforceable
     debt or liability:
     Held: At the stage of issuance of process by the Metropolitan
     Magistrate, what is prima facie required to be seen is the
     issuance of cheque by the drawer in favour of the complainant,
     its dishonour on presentation by the payee, issuance of statutory
     notice u/s.138 and filing of the complaint within the prescribed
     statutory period – If the drawer does not dispute issuance of such
     a cheque nor does he deny his signature on the dishonoured
     cheque, the statutory presumption as contemplated u/s.139
     comes into play – As a result, the burden would shift on the
     drawer of the cheque to prove that the cheque was not issued
     for any legally enforceable debt or liability – This exercise has to
     be undertaken during the trial either by relying upon the material
     brought on record by the complainant or by the drawer leading
     evidence in rebuttal. [Para 8]
28                                                             [2026] 5 S.C.R.

                           Supreme Court Reports


                               Case Law Cited
      Sunil Todi and Others v. State of Gujarat and Another, 2021 INSC
      823 : [2021] 9 SCR 1086; Rangappa v. Sri Mohan, 2010 INSC
      289 : [2010] 6 SCR 507; Rajesh Jain v. Ajay Singh, 2023 INSC
      888 : [2023] 13 SCR 788 – referred to.

                                 List of Acts
      Negotiable Instruments Act, 1881.

                              List of Keywords
      Cheque dishonoured; Complaint under Section 138 of the
      Negotiable Instruments Act, 1881 dismissed at pre-trial stage;
      Cheque not towards any legally enforceable debt; Basic ingredients
      of Section 138 of the Negotiable Instruments Act, 1881 duly satisfied
      by complainant; Order issuing process set aside; Dismissal of
      complaint under Section 138 of the Negotiable Instruments Act,
      1881 unjustified; Statutory presumption under Section 139 of the
      Negotiable Instruments Act, 1881; Cheque issued for a legally
      enforceable debt or liability; Drawer does not dispute issuance
      of cheque; Drawer does not deny signature on the dishonoured
      cheque.

                             Case Arising From
      CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
      1783 of 2026
      From the Judgment and Order dated 29.03.2023 of the High Court
      of Judicature at Bombay in WP No. 1071 of 2023.

                          Appearances for Parties
      Advs. for the Appellant(s):
      Mukul Rohatgi, Siddharth Bhatnagar, Sr. Advs., Ms. Ranjeeta
      Rohatgi, Gaurav Srivastava, Ms. Shrika Gautam.
      Advs. for the Respondent(s):
      Dr. A.M. Singhvi, Kavin Gulati, Sr. Advs., Omkar Deshpande,
      Siddharth Dharmadhikari, Aaditya Aniruddha Pande, Shrirang
      B. Varma, C.D. Mehta, Mahesh Agarwal, Ankur Saigal, Bhavik
      Mehta, Ms. Kajal Dalal, Ms. Deepshika Mishra, Ms. Prakruti,
      E. C. Agrawala.
[2026] 5 S.C.R.                                                             29

                 Renuka v. The State of Maharashtra and Another


                        Judgment / Order of the Supreme Court

                                     Judgment

       Atul S. Chandurkar, J.

1.     Leave granted.
2.     On a complaint filed under Section 138 of the Negotiable Instruments
       Act, 18811, learned Metropolitan Magistrate on being satisfied
       that there was prima-facie material to proceed against the second
       respondent issued process on 17th June 2022. The second respondent
       invoked the revisional jurisdiction of the Sessions Court for challenging
       the said order. The Sessions Court was of the view that on the
       date of issuance of the cheque in question, there was no legally
       enforceable debt to be satisfied by the drawer. By the order dated
       30th December 2022, it set aside the order passed by the learned
       Metropolitan Magistrate issuing process. The complainant approached
       the High Court of Bombay by filing a writ petition under Article 227
       of the Constitution of India and challenged the order passed by the
       Sessions Court. The learned Single Judge, however, dismissed the
       writ petition observing that no error of jurisdiction was found in the
       impugned order. Being aggrieved, the complainant has challenged
       the aforesaid orders in this Criminal Appeal.
3.     Shorn of necessary details, the facts relevant for considering the
       challenge as raised are that it is the case of the appellant that she had
       some disputes with her husband, Mr. Ashwin Natwarlal Sheth in the
       matter of alleged illegal and fraudulent transfer of shares pertaining to
       Sheth Developers and Realtors (India) Limited and Sheth Developers
       Private Limited. She had filed various complaints after which her
       husband commenced negotiations for amicable settlement of the
       disputes. On 12th January 2022, a final draft settlement agreement
       was finalised and drawn up between the parties. One of the terms
       of the settlement was that the appellant’s husband would gift to
       the appellant the fifth, sixth and seventh floor premises of Natwar
       Bungalow along with interest in a plot located in a Co-operative



1    For short, the N.I. Act
30                                                         [2026] 5 S.C.R.

                         Supreme Court Reports


      Housing Society. He also agreed to pay the appellant a sum of
      ₹50 crores on executing a Declaration-cum-Indemnity document
      so as to withdraw the complaints filed by her against her husband.
      With a view to safeguard the interest of the appellant, the second
      respondent, who was a close friend of the appellant’s husband, agreed
      to act as a mediator and to keep the amount of ₹50 crores in an
      escrow account till the actual payment was made by the appellant’s
      husband. Accordingly, on 12th January 2022, the second respondent
      issued Cheque No.080261 for an amount of ₹50 crores in favour of
      the appellant. The appellant claims to have signed the document
      titled as Declaration-cum-Indemnity on 13th January 2022. It is the
      further case of the appellant that the sale of shares of the concerned
      entity was completed contrary to the settlement agreement and the
      appellant’s husband received the sale consideration. The appellant
      accordingly deposited the cheque that had been issued by the second
      respondent for encashment. However, on 06th April 2022, the said
      cheque was dishonoured and returned with the remark ‘payment
      stopped by drawer’. The appellant, on 20th April 2022, issued a
      notice under Section 138 of the N.I. Act to the second respondent.
      The said notice was replied by the second respondent on 04th May
      2022, denying any liability to make such payment. The appellant
      gave her further reply to the second respondent and again called
      upon him to make the necessary payment. Since no further steps
      were taken by the second respondent, the appellant on 16th June
      2022 filed a complaint against the second respondent under Section
      138 of the N.I. Act.
4.    Mr. Mukul Rohatgi, learned Senior Advocate for the appellant
      submitted that the Sessions Court erred in setting aside the order
      passed by the learned Metropolitan Magistrate issuing process on
      the premise that the dishonoured cheque had been issued for a debt
      that was not legally enforceable. According to him, on a plain reading
      of the complaint filed by the appellant under Section 138 of the N.I.
      Act coupled with the undisputed position as regards the issuance
      of the cheque by the second respondent, its valid presentation, its
      subsequent dishonour, issuance of the statutory notice and failure
      on the part of the second respondent to comply with the statutory
      notice were the only relevant considerations at the stage of issuance
      of process in the complaint. In other words, it was urged that the
[2026] 5 S.C.R.                                                        31

              Renuka v. The State of Maharashtra and Another


      presumption under Section 139 of the N.I. Act that operated in favour
      of the payee could be dislodged by the drawer of the cheque only
      during the course of trial and not at the pre-trial stage. When the
      basic ingredients for making out an offence under Section 138 of
      the N.I. Act had been made out and process had been issued by
      the learned Metropolitan Magistrate, scuttling the proceedings at
      this stage was unjustified. To substantiate this contention, reliance
      was placed on the decision in Sunil Todi and others Vs. State
      of Gujarat and another2 by urging that the Sessions Court had
      misread the said judgment. It was, thus, submitted that the Sessions
      Court was not justified in coming to the conclusion that the cheque
      in question had not been issued for discharge of any legal liability.
      Such a finding could be rendered only at the trial and not on the
      basis of the statements made during the course of proceedings
      challenging the issuance of process. He, therefore, submitted that
      the impugned orders be set aside and the complaint be restored for
      its adjudication on merits.
5.    On the other hand, Dr. A. M. Singhvi, learned Senior Advocate for
      the second respondent supported the impugned orders and opposed
      the contentions raised on behalf of the appellant. He submitted that
      both the Courts were justified in coming to the conclusion that the
      cheque in question had not been shown to have been issued towards
      the discharge of any legally enforceable debt. The document dated
      12th January 2022, which was in the form of a settlement agreement,
      was admittedly not signed by the second respondent. There was no
      concluded agreement as such and, therefore, the second respondent
      could not be bound by the statements made in that agreement. The
      liability under the cheque issued by the second respondent would
      arise only after the agreement between the parties was complete.
      The Courts were justified in relying upon the decision in Sunil Todi
      (supra) wherein it was held that where the payment of debt was
      dependent on the happening of an event which never occurred,
      there would be no legally recoverable liability to be satisfied. In
      view of this position on record, no useful purpose would be served
      by continuing the proceedings under Section 138 of the N.I. Act as
      it would amount to an abuse of the process of law. It was, thus,


2    2021 INSC 823
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                         Supreme Court Reports


      submitted that the complaint having been rightly dismissed by the
      learned Sessions Judge, which order was upheld by the High Court,
      no interference therein was called for. He, therefore, urged that the
      appeal ought to be dismissed.
6.    We have heard the learned Senior Advocates appearing for the
      parties at length and we have also perused the relevant documentary
      material on record. Having given due consideration to the rival
      submissions, we are of the view that the Sessions Court as well as
      the High Court were not justified in coming to the conclusion that
      the complaint as filed by the appellant under Section 138 of the N.I.
      Act was liable to be dismissed at the pre-trial stage on the ground
      that the cheque issued by the second respondent was not towards
      any legally enforceable debt.
7.    Perusal of the complaint filed by the appellant under Section 138
      of the N.I. Act indicates reference to an amicable settlement of
      various disputes between the appellant and her husband, pursuant
      to which the appellant’s husband executed a registered irrevocable
      Power of Attorney dated 10 th December 2022 in favour of the
      appellant. It was agreed under the settlement agreement that the
      appellant’s husband would transfer by way of gift three properties
      and also pay an amount of ₹50 crores on the execution of a
      Declaration-cum-Indemnity document. In reciprocation, complaints
      made by the appellant as regards fraudulent transfer of her shares
      in two companies were to be withdrawn. To ensure execution of
      the Declaration-cum-Indemnity document, the second respondent
      acted as a guarantor and issued the cheque in question drawn
      in favour of the appellant. The appellant accordingly signed the
      Declaration-cum Indemnity document on 13 th January 2022.
      On getting knowledge of the sale of certain shares contrary to
      the settlement agreement, the appellant presented the cheque
      issued by the second respondent for being honoured. It has been
      further stated that said cheque was dishonoured with the remark
      ‘payment stopped by drawer’. A reference is thereafter made to
      the issuance of a statutory notice under Section 138 of the N.I. Act
      dated 20th April 2022, its service on the second respondent and his
      reply dated 04th May 2022 denying any liability. Accordingly, the
      said complaint came to be filed by the appellant. The appellant’s
      statement was duly verified by the learned Metropolitan Magistrate
      and on being prima facie satisfied that the ingredients of Section
[2026] 5 S.C.R.                                                             33

              Renuka v. The State of Maharashtra and Another


      138 of the N.I. Act were present, process came to be issued to
      the second respondent.
8.    It is to be borne in mind that at the stage of issuance of process by
      the learned Metropolitan Magistrate, what is prima facie required to
      be seen is the issuance of cheque by the drawer in favour of the
      complainant, its dishonour on presentation by the payee, issuance
      of statutory notice under Section 138 of the N.I. Act and filing of
      the complaint within the prescribed statutory period. If the drawer
      does not dispute issuance of such a cheque nor does he deny his
      signature on the dishonoured cheque, the statutory presumption as
      contemplated under Section 139 of the N.I. Act comes into play. As
      a result, the burden would shift on the drawer of the cheque to prove
      that the cheque was not issued for any legally enforceable debt or
      liability. This exercise has to be undertaken during the trial either by
      relying upon the material brought on record by the complainant or
      by the drawer leading evidence in rebuttal. At the stage of issuance
      of process, the statutory presumption under Section 139 of the N.I.
      Act cannot be dislodged in a summary manner merely by contending
      that the cheque issued was not for any legally enforceable debt or
      liability.
9.    We may in this regard refer to two decisions of this Court that have
      reiterated the view that once the basic ingredients of Section 138
      of the N.I. Act are duly satisfied by the complainant, the rebuttal of
      statutory presumption by the drawer can only be made during the
      course of trial.
      In Rangappa Vs. Sri Mohan3, it has been explicitly reiterated that
      the presumption mandated by Section 139 of the N.I. Act includes
      the presumption as regards existence of a legally enforceable debt
      or liability. It has been held that Section 139 is an example of a
      reverse onus clause that has been included in furtherance of the
      legislative object of improving the credibility of negotiable instruments.
      The presumption is rebuttable and the accused can raise a defence
      wherein the existence of a legally enforceable debt or liability can
      be contested.




3    2010 INSC 289
34                                                              [2026] 5 S.C.R.

                             Supreme Court Reports


       In Rajesh Jain Vs. Ajay Singh4, it has been held as under:
              “34. The NI Act provides for two presumptions: Section
              118 and Section 139. Section 118 of the Act inter alia
              directs that it shall be presumed, until the contrary is
              proved, that every negotiable instrument was made or
              drawn for consideration. Section 139 of the Act stipulates
              that ‘unless the contrary is proved, it shall be presumed,
              that the holder of the cheque received the cheque, for the
              discharge of, whole or part of any debt or liability’. It will
              be seen that the ‘presumed fact’ directly relates to one of
              the crucial ingredients necessary to sustain a conviction
              under Section 138.
              35. Section 139 of the NI Act, which takes the form of a
              ‘shall presume’ clause is illustrative of a presumption of
              law. Because Section 139 requires that the Court ‘shall
              presume’ the fact stated therein, it is obligatory on the
              Court to raise this presumption in every case where the
              factual basis for the raising of the presumption had been
              established. But this does not preclude the person against
              whom the presumption is drawn from rebutting it and
              proving the contrary as is clear from the use of the phrase
              ‘unless the contrary is proved’.
              36. The Court will necessarily presume that the cheque
              had been issued towards discharge of a legally enforceable
              debt/liability in two circumstances. Firstly, when the drawer
              of the cheque admits issuance/execution of the cheque
              and secondly, in the event where the complainant proves
              that cheque was issued/executed in his favour by the
              drawer. The circumstances set out above form the fact(s)
              which bring about the activation of the presumptive clause.
              [Bharat Barrel Vs. Amin Chand] [(1999) 3 SCC 35]
                                 xxxxxxxxxxxxxxxxxxx
              38. As soon as the complainant discharges the burden to
              prove that the instrument, say a cheque, was issued by
              the accused for discharge of debt, the presumptive device


4     2023 INSC 888
[2026] 5 S.C.R.                                                           35

            Renuka v. The State of Maharashtra and Another


           under Section 139 of the Act helps shifting the burden
           on the accused. The effect of the presumption, in that
           sense, is to transfer the evidential burden on the accused
           of proving that the cheque was not received by the Bank
           towards the discharge of any liability. Until this evidential
           burden is discharged by the accused, the presumed fact
           will have to be taken to be true, without expecting the
           complainant to do anything further.”
10. A perusal of the revisional order passed by the learned Judge of
    the Sessions Court indicates that he has given much importance to
    the fact that the agreement dated 12th January 2022 was not signed
    by the second respondent and, hence, the issuance of the cheque
    in question was not for any enforceable debt. He also appears
    to have given importance to the dispute between the appellant
    and her husband by stating that it was a matrimonial dispute and
    civil litigation between the said parties was pending in various
    Courts. In our view, the learned Judge misdirected himself when
    he proceeded to give more weightage to the document dated 12th
    January 2022 and in the process, ignored the fact that the basic
    ingredients for attracting the provisions of Section 138 of the N.I.
    Act had been duly satisfied by the appellant, at least for issuance
    of process. The drawing of the cheque by the second respondent,
    its presentation and subsequent dishonour at the instructions of the
    second respondent is not in dispute. The second respondent does
    not also dispute that he had issued the said cheque and that it was
    duly signed by him. The issuance of statutory notice as well as filing
    of the complaint within the prescribed period are also not in dispute.
    In such a situation, 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. We
    are of the view that in the facts of the present case, the dismissal of
    the complaint as a consequence of setting aside the order issuing
    process is totally unjustified in the absence of any material being
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                             Supreme Court Reports


      brought on record by the second respondent to rebut the statutory
      presumption and prove his contention that the cheque was issued
      not towards any enforceable debt or liability.
      Since we are inclined to restore the complaint for being tried on
      merits, it is not necessary to deal with the decision in Sunil Todi
      and others (supra) in detail. Suffice it to observe that even in the
      said decision, it has been held that disputed questions as regards
      existence of outstanding liability are questions of fact that have to
      be determined at the trial on the basis of evidence.
11. For all these reasons, we are of the view that the learned Judge
    of the Sessions Court committed an error in setting aside the order
    dated 17th June 2022 passed by the learned Metropolitan Magistrate
    issuing process under Section 138 of the N.I. Act. The High Court
    also fell into error in upholding the order passed by the learned
    Sessions Judge. Accordingly, both the aforesaid orders are set aside.
    The complaint filed by the appellant being CC1831/SC/2022 stands
    restored for its adjudication on merits.
      We clarify that the complaint shall be decided on its own merits and
      in accordance with law after giving due opportunity to all parties
      concerned. Any observations made in this judgment shall not be
      construed as an expression of opinion on the merits of the said case.
12. The Criminal Appeal is allowed in aforesaid terms.

      Result of the case: Appeal allowed.




      †
          Headnotes prepared by: Divya Pandey